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Trematon - Audited results for the year ended 31 August 2006
Trematon Capital Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1977/008691/06)
Share code: TMT ISIN: ZAE000013991
("Trematon")
Audited results for the year ended 31 August 2006
Balance sheet
Audited Audited
31 August 31 August
2006 2005*
R"000 R"000
ASSETS
Non-current assets 81 559 116 151
Equipment 18 -
Investment in joint venture 4 718 -
Investments 76 047 116 151
Deferred tax asset 776 -
Current assets 30 437 265
Investments 7 548 -
Tax receivable 69 76
Trade and other receivables 31 5
Cash and cash equivalents 22 789 184
Total assets 111 996 116 416
EQUITY AND LIABILITIES
EQUITY 105 161 98 252
Share capital and share premium 203 296 200 046
Fair value reserve 7 095 19 051
Accumulated loss (105 230) (120 845)
LIABILITIES
Non-current liabilities 1 968 3 231
Deferred tax liability 1 968 3 231
Current liabilities 4 867 14 933
Loans payable - 13 605
Tax payable 4 358 621
Trade and other payables 476 675
Dividend payable 32 32
Bank overdraft 1 -
Total equity and liabilities 111 996 116 416
Net asset value per share (cents) 60 57
(based on shares in issue at end of year)
* Restated comparative figures (see note 3)
Income statement
Audited Audited
Year ended Year ended
31 August 31 August
2006 2005*
Notes R"000 R"000
Trading profit 17 564 3 078
Investment income 3 411 905
Finance costs (288) (1 237)
Loss from equity accounted investment (52) -
Profit before taxation 20 635 2 746
Taxation (5 020) (621)
Profit for the year 15 615 2 125
Number of shares issued ("000) 174 873 171 623
Weighted average number of shares ("000) 173 248 132 857
Basic and diluted earnings per share (cents) 9.0 1.6
Headline earnings per share (cents) 2 4.6 0.6
* Restated comparative figures (see note 3)
Cash flow statement
Audited Audited
Year ended Year ended
31 August 31 August
2006 2005*
R"000 R"000
Cash flows from operating activities
Cash (used in)/generated from operations (3 416) 1 012
Interest received 3 292 905
Dividends received 119 -
Finance costs (288) (1 237)
Tax paid (1 288) -
Net cash from operating activities (1 581) 680
Cash flows from investing activities
Acquisition of equipment (20) -
Loan advanced to joint venture (4 770) -
Acquisition of investments (85 023) (38 025)
Proceeds from sale of investments 123 930 8 399
Net cash from investing activities 34 117 (29 626)
Cash flows from financing activities
Proceeds on share issue 3 250 35 783
Advancement of loans payable (13 605) (6 770)
Net cash from financing activities (10 355) 29 013
Net increase in cash and cash equivalents 22 181 67
Cash and cash equivalents at the
beginning of the year 184 64
Effect of exchange rate movement
on cash balances 423 53
Total cash and cash equivalents at the end
of the year 22 788 184
Directors" review
These results comply with International Financial Reporting Standards ("IFRS").
Previous results have been restated to comply with IFRS.
The current reporting period represents the first full 12-month period during
which the company has been controlled by current management. Over the past 18
months Trematon has evolved from a passive shell with one listed asset to a
diversified investment company with interests in listed shares, unlisted
entities and property.
The past 12 months have been very active and represent a positive trading and
investment period. Profit before tax amounted to R20.6m (2005: R2.7m) which
comprises mainly realised profits on trading and investment activities. These
profits were generated on net assets of R43.9m at the start of the period (the
balance of R54.4m being invested in Intec Telecom Systems plc). Gross expenses
including salaries, directors" fees and costs related to maintaining a listing,
amounted to R3.5m (2005: R3.3m).
Net asset value per share increased to 60c (from 57c at the end of the previous
financial year). The increase in net asset value was muted by the decline in the
value of Intec Telecom Systems plc. During the year the value of Trematon"s
investment in Intec declined from R54.4m to R38.6m as a result of a sharp
decline in the share price of Intec from 60.7p to 37.0p. The decline in the
share price followed a trading update in which Intec indicated that it would not
achieve its projected revenue for the 2006 financial year.
The opportunity cost of holding Intec has been significant because it represents
a material portion of Trematon"s capital and generates no income. However,
Trematon has diversified and grown its asset base and is progressively reducing
its dependence on Intec. At year-end Intec represented 37% of net assets
compared to 55% on 31 August 2005 and 100% on 31 August 2004.
The unlisted portfolio has grown to R19.4m (18.5% of net asset value) and
comprises mainly investments in Grand Parade Investments Ltd and Club Mykonos
Langebaan Ltd.
Trematon"s holding in Shops for Africa Ltd is valued at R18m (17.1% of net asset
value). Trematon currently owns 54.7m shares in Shops for Africa Ltd amounting
to 75.8% of the total equity. At year-end Shops for Africa was in liquidation.
Subsequent to the year-end Trematon made a successful application to have the
voluntary winding-up set aside. Shops for Africa Ltd is currently listed on the
JSE but trading in the shares has been suspended. Four Trematon directors have
been appointed to the board and are currently considering options which will
maximise value for shareholders. This may include, inter alia, an application to
the JSE to lift the suspension.
Trematon had no material listed investments at year-end other than as detailed
above. At the end of the 2005 financial year, Trematon held 1,700,000 linked
units in Spearhead Property Holdings Ltd. All of these linked units have been
sold.
Trematon owns 50% of Stalagmite Property Investments (Pty) Ltd which is a joint
venture with Gateway Property Developments (Pty) Ltd. Stalagmite is the holding
company for a development in the Strand, near Somerset West on the route of the
proposed new N2 highway. This investment is not yet of a significant size but
further investments are planned and Stalagmite is expected to realise material
profits over the next 12-24 months. Details of the development can be found at
www.broadwaypark.co.za
At the end of the previous financial year Trematon had an unsecured loan to
Mican Limited of R12.8m which was repaid in full during 2006. Trematon had no
borrowings and had cash on hand of R22.8m at year-end.
Trematon"s policy is to reinvest its cash resources and accordingly, no dividend
was declared. Shareholders should not expect any dividend payments in the short
term.
Shareholders should be aware that Trematon has very little annuity income and
that at present, all profits arise from trading and investment activities.
Trading conditions were positive during the 2006 financial year and we will
endeavour to take advantage of further opportunities in the market.
MONTY KAPLAN ARNOLD SHAPIRO
Chairman Chief Executive Officer
Cape Town
16 November 2006
Statement of changes in equity
Share Share Total share
capital premium capital
Notes R"000 R"000 R"000
Balance at 1 September 2004 3 1 052 163 211 164 263
Total recognised income - - -
Profit for the year 3 - - -
Fair value gains on
available-for-sale investments - - -
Fair value gains on available-
for-sale investments realised
through income statement - - -
Issue of shares 664 35 885 36 549
Share issue expenses - (766) (766)
Balance at 1 September 2005 3 1 716 198 330 200 046
Total recognised income - - -
Profit for the year - - -
Fair value loss on available-
for-sale investments - - -
Fair value gains on available-
for-sale investments realised
through income statement - - -
Issue of shares 33 3 217 3 250
Balance at 31 August 2006 1 749 201 547 203 296
Statement of changes in equity
Fair value Accumulated Total
reserve loss equity
Notes R"000 R"000 R"000
Balance at 1 September 2004 3 4 787 (122 970) 46 080
Total recognised income 14 264 2 125 16 389
Profit for the year 3 - 2 125 2 125
Fair value gains on
available-for-sale investments 15 614 - 15 614
Fair value gains on available-
for-sale investments realised
through income statement (1 350) - (1 350)
Issue of shares - - 36 549
Share issue expenses - - (766)
Balance at 1 September 2005 3 19 051 (120 845) 98 252
Total recognised income (11 956) 15 615 3 659
Profit for the year - 15 615 15 615
Fair value loss on available-
for-sale investments (4 352) - (4 352)
Fair value gains on available-
for-sale investments realised
through income statement (7 604) - (7 604)
Issue of shares - - 3 250
Balance at 31 August 2006 7 095 (105 230) 105 161
NOTES:
1 Presentation of Annual Financial Statements
Trematon Capital Investments Limited (the "company") is a company domiciled in
South Africa. The consolidated financial statements of the company for the year
ended 31 August 2006 comprise the company, its subsidiaries and its joint
venture (together referred to as the "group").
The financial statements were authorised for issue by the directors on 16
November 2006.
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and its interpretations adopted by the
International Accounting Standards Board (IASB). The financial statements have
been prepared on the going concern basis using a combination of the historical
cost and fair value basis of accounting.
These are the group"s first consolidated financial statements under IFRS.
These accounting policies are consistent with the previous year, except for the
changes set out in note 3 Impact of conversion to International Financial
Reporting Standards (IFRS).
The consolidated annual financial statements and the company annual financial
statements are stated in Rands, which is the company"s functional currency.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or the period of
the revision and future periods if the revision affects both current and future
periods.
Audited Audited
Year ended Year ended
31 August 31 August
2006 2005
R"000 R"000
2 Headline earnings per share
Headline earnings per share
is calculated as follows:
Profit for the year 15 615 2 125
Fair value gains on
available-for-sale investments
realised through the income statement (8 894) (1 579)
Tax effects 1 290 229
Headline earnings 8 011 775
Headline earnings per share (cents) 4.6 0.6
Diluted headline earnings per share (cents) 4.6 0.6
The calculation of headline earnings per share is based on the weighted average
number of 173 247 545 shares in issue during the year (2005: 132 857 394).
3 Impact of conversion to International Financial Reporting Standards (IFRS) For
the year ended 31 August 2005, the group prepared its financial statements under
South African Statements of Generally Accepted Accounting Practice (SA GAAP).
JSE Limited (JSE) Listings Requirements prescribe that the group prepare its
annual financial statements in accordance with IFRS. IFRS refers to the
application of International Accounting Standards (IAS) and International
Financial Reporting Standards (IFRS).
This requirement applies to all listed companies for financial reporting periods
beginning on or after 1 January 2005 and consequently, the year ended 31 August
2006 is the group"s first published annual financial statements under IFRS. As
the group publishes comparative information for one year, the date of transition
to IFRS is 1 September 2004, which represents the start of the earliest period
of comparative information presented.
In order to explain how the group"s reported performance and financial position
are impacted by IFRS, the group has restated information previously published
under SA GAAP to the equivalent basis under IFRS. This restatement follows the
guidelines set out in IFRS 1 First-time Adoption of International Financial
Reporting Standards (IFRS 1).
As required by IFRS 1 the group"s opening balance sheet at 1 September 2004
has been restated to reflect all existing IFRS statements applicable at 31
August 2006.
Impact of the conversion to IFRS is as follows:
Effects of
transition
SA GAAP to IFRS IFRS
Balance sheet - 1 September 2004
Fair value reserve - 4 787 4 787
Accumulated loss (118 183) (4 787) (122 970)
Balance sheet - 1 September 2005
Deferred tax liability 3 317 (86) 3 231
Fair value reserve - 19 051 19 051
Accumulated loss (101 880) (18 965) (120 845)
Income statement for the year
ended 31 August 2005
Trading profit 20 573 (17 495) 3 078
Net profit before tax 20 241 (17 495) 2 746
Taxation (3 938) 3 317 (621)
Profit for the year 16 303 (14 178) 2 125
KPMG Inc has provided an unqualified audit opinion, which is available for
inspection at the company"s registered office, on the August 2006 annual
financial statements, which have been summarised for the purposes of this
report.
Registered office: Ist Floor, The Spearhead, 42 Hans Strijdom Avenue,
Foreshore, 8001
Postal address: PO Box 7677, Roggebaai, 8012. Tel: (021) 421-5550. Fax: (021)
421-5551
Directors: M Kaplan (Chairman), AJ Shapiro (CEO), A Groll (executive),
AM Louw (non-executive), R Stumpf (non-executive)
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg, 2001
Sponsor: Bridge Capital Advisors (Pty) Limited, 1st Floor, Building 22A,
The Woodlands, Woodlands Drive, Woodmead, Sandton, 2146
Date: 16/11/2006 03:00:50 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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