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TMT - Trematon Capital Investments Limited - Unaudited interim results for the

Release Date: 19/04/2011 11:28
Code(s): TMT
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TMT - Trematon Capital Investments Limited - Unaudited interim results for the six months ended 28 February 2011 TREMATON CAPITAL INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1997/008691/06) Share code: TMT ISIN: ZAE000013991 ("Trematon" or "the company") Unaudited Interim Results for the six months ended 28 February 2011 DIRECTORS` REVIEW Commentary on financial results Net asset value at the end of the interim period was 103 cents per share (2010: 92 cents per share) which represents an increase of 34% since the August 2010 year-end and 12% since the previous interim period. The directors believe that the net asset value is a robust but conservative estimate of the value of the company. The statement of financial position reflects minimal gearing and sufficient cash on hand and debt capacity to add new investments during the remainder of the financial year. The group has weathered the economic hardships of the past few years and should benefit from any economic upswing while being financially strong enough to weather future turbulence and take advantage of any opportunities which arise during such periods. The biggest change in the statement of financial position is the reduction in the non-controlling interest which arose from the purchase of further shares in Club Mykonos Langebaan Limited ("CML") during the period as a result of the scheme of arrangement referred to below. CML was an 87%-held subsidiary at the end of the interim period (from 34% at year-end). Earnings per share amounted to 2.9 cents (2010: 10.6 cents). The reduction in earnings was mostly a result of income from the sale of buildings in the Boulevard Park Trust being accounted for in the prior period which were not repeated in the current period. The group does not have a high component of annuity earnings and profits generated from the realisation of investments are, by their nature, lumpy and inconsistent. Investments are conservatively valued and it is likely that the sale of such investments at the right time will generate values which are higher than the carrying value. However, the timing of the realisations is dependent on market conditions and will not occur in an even pattern. The group`s operations generated a trading loss of R6.5 million (2010: loss of R3.7 million). The economic value added in the underlying portfolio is not fully reflected in the statement of comprehensive income. Most of the gain in net asset value during the period was taken directly to equity in the statement of financial position and is not reflected in current income. The statement of cash flow shows an amount of R25.7 million for cash utilised in operations. This figure includes an adjustment of R40.2 million which is a non- cash item in respect of a profit on change in shareholding of a subsidiary. This results in an overstatement of cash outflows used in operations. In effect cash generated from operations was a positive R14.5 million. There were no changes to the board of directors during the period under review. Commentary on individual investments Club Mykonos Langebaan Limited For further information see www.clubmykonos.co.za CML`s operations have been restructured to a level appropriate for the current level of economic activity. The CML group made a profit of R4.1 million during the six-month period. Future growth at CML is heavily dependent on the state of the property market on the West Coast which remains subdued, but the land available for development and sale is well located and should generate good returns. The Mykonos Casino continues to trade well and maintained its overall profitability in its most recent financial year ended December 2010. During the current financial year CML entered into a scheme of arrangement with its shareholders in terms of which Trematon purchased a further 53% of the ordinary shares in CML, taking its total holding to 87%. This is the biggest single investment made by Trematon during the period and is expected to yield good long-term returns once the property market recovers. Faircare Trust For further information see www.faircare.co.za The market for retirement village units is partially dependent on the related market for ordinary residential units because many retirement unit purchases are funded by the sale of residential homes. Faircare Trust ("Faircare") has performed according to expectations in the current period and we are confident that the embedded value in the contractual agreements in the retirement villages will prove to be profitable in the long run. Village management is focused on ensuring that the level of service in the villages is of the highest possible standards and that our reputation for world-class health care is maintained and enhanced over time. Since Faircare maintains an interest in the long-term capital value of the retirement units, it provides us with an incentive to invest in the village infrastructure and to ensure that the villages remain well managed with satisfied residents. The short-term cost of this investment is beneficial to the villages and should yield good returns as the capital stock improves in value over time. Other investments The group has an indirect stake of 7.2% in Mazor Group Limited and a small direct and indirect minority stake in Grand Parade Investments Limited ("GPI"). The holding in GPI was increased during the period. For further information see www.mazor.co.za and www.grandparade.co.za The group also trades in a variety of listed shares and takes short-term positions from time to time. Direct property investments Boulevard Park Trust The group owns an effective 37.5% interest in the Boulevard Park Trust, which in turn owns 49% of the Boulevard Office Park. The park is now 94% let, mostly to blue-chip tenants and occupies a high visibility position adjacent to one of the main access routes to the CBD. Loans due to Trematon from the Boulevard Park Trust at the end of the period amounted to R21.9 million (2010: R67.6 million) and further repayments are anticipated during the remainder of the financial year. This project was brought on stream at an unfavourable time for the general market, but the low level of vacancies and quality of the rent roll bear testimony to its appeal as an AAA office park and future growth in the equity value of the investment is assured. Other Loans due from the New Wembley Trust amount to R11.2 million although Trematon no longer has an equity interest in the venture. The repayment of this loan is expected to take place shortly. Subsequent event Trematon has entered into agreements in terms of which it has acquired a 50% interest in a property loan stock company with joint venture partners, Brian Goldberg and Ilan Kaplan. As an initial investment the joint venture has acquired five properties with a total extent of 20 975 m2 ("the properties") for a total purchase consideration of R90 million. Details of this transaction were published on SENS on 31 March 2011. Prospects The group has made substantial investments in existing subsidiaries during the period and new investments as detailed above since the end of the period. Several further opportunities are under investigation and the trading portfolio is becoming more active. Economic activity is not yet at a level where high short-term returns from these assets can be anticipated but the board is confident that we have made purchases at good entry prices which will reward shareholders in the years to come. No interim dividend has been declared but a final dividend is anticipated in the absence of adverse circumstances. STATEMENT OF FINANCIAL POSITION Unaudited Audited 28 February 31 August 2011 2010 2010 R`000 R`000 R`000
ASSETS Non-current assets 171 431 298 038 178 871 Property, plant and equipment 7 939 7 735 8 117 Investment property 1 786 1 786 1 786 Investments 160 616 287 108 168 148 Deferred tax asset 1 090 1 409 820 Current assets 98 534 79 425 101 280 Loans receivable 18 725 896 10 695 Trade and other receivables 4 120 6 357 4 841 Investments 6 470 13 000 - Inventory 29 150 30 771 29 946 Tax receivable 12 224 142 Cash and cash equivalents 40 057 28 177 55 656 Total assets 269 965 377 463 280 151 EQUITY AND LIABILITIES Equity 195 542 258 997 233 506 Share capital and share premium 203 296 203 296 203 296 Treasury shares (3 220) - - Fair value reserve 5 702 4 763 3 197 Accumulated loss (28 999) (46 428) (71 725) Total equity attributable to equity holders of the parent 176 779 161 631 134 768 Non-controlling interest 18 763 97 366 98 738 Non-current liabilities 4 837 4 684 4 429 Deferred tax liability 4 837 4 684 4 429 Current liabilities 69 586 113 782 42 216 Loans payable 26 055 105 511 24 825 Creditors 7 139 7 280 7 266 Tax payable 9 37 2 784 Trade and other payables 21 483 954 1 490 Provisions - - 5 851 Bank overdraft 14 900 - - Total equity and liabilities 269 965 377 463 280 151 Net asset value per share (cents) 103 92 77 STATEMENT OF COMPREHENSIVE INCOME Unaudited
Six months ended 28 February 2011 Notes R`000
Revenue 14 812 Trading loss (6 466) Investment income 9 191 Finance costs (1 490) Profit on change in shareholding - Impairment of associate - Reversal of impairment/(impairment of loan) 861 Profit from equity accounted investment (net of tax) 3 269 Profit before taxation 5 365 Taxation 170 Profit/(loss) for the period/year 5 535 Other comprehensive income Fair value gain on available-for-sale investments 2 505 Profit/(loss) attributable to: Equity holders of the parent 4 997 Non-controlling interest 538 Profit/(loss) for the period 5 535 Total comprehensive income attributable to: Equity holders of the parent 7 502 Non-controlling interest 538 8 040 Earnings per share Number of shares issued (thousands) 172 221 Weighted average number of shares (thousands) 174 326 Earnings per share (cents) 2.9 Diluted earnings per share (cents) 2.9 Headline earnings per share (cents) 2 2.4 Diluted headline earnings per share (cents) 2.4 Unaudited Audited Six months ended Year ended
28 February 31 August 2010 2010 R`000 R`000 Revenue 9 389 6 877 Trading loss (3 717) (24 558) Investment income 7 327 14 416 Finance costs (4 806) (6 779) Profit on change in shareholding 221 - Impairment of associate (11 426) (468) Reversal of impairment/(impairment of loan) (1 008) (3 848) Profit from equity accounted investment (net of tax) 34 249 21 915 Profit before taxation 20 840 678 Taxation (94) (3 461) Profit/(loss) for the period/year 20 746 (2 783) Other comprehensive income Fair value gain on available-for-sale investments 1 833 268 Profit/(loss) attributable to: Equity holders of the parent 18 549 (7 132) Non-controlling interest 2 197 4 349 Profit/(loss) for the period 20 746 (2 783) Total comprehensive income attributable to: Equity holders of the parent 20 382 (6 864) Non-controlling interest 2 197 4 349 22 579 (2 515)
Earnings per share Number of shares issued (thousands) 174 873 174 873 Weighted average number of shares (thousands) 174 873 174 873 Earnings per share (cents) 10.6 (4.1) Diluted earnings per share (cents) 10.6 (4.1) Headline earnings per share (cents) 17.7 4.3 Diluted headline earnings per share (cents) 17.7 4.3 STATEMENT OF CASH FLOW Unaudited Audited Six months ended Year ended
28 February 31 August 2011 2010 2010 R`000 R`000 R`000 Cash flows from operating activities Cash utilised in operations (25 744) (3 346) (249) Finance income 5 686 6 937 14 026 Dividends received 3 505 390 390 Finance costs (1 490) (4 806) (6 779) Dividend paid (2 583) - - Tax paid (2 744) (177) (126) Net cash from operating activities (23 370) (1 002) 7 262 Cash flows from investing activities Acquisition of property, plant and equipment (9) (323) (809) Acquisition of investment property - (340) (340) Proceeds on disposal of property, plant and equipment - 13 77 (Increase)/decrease in loans receivable (13 020) (656) 15 571 Loans repaid by/(advanced to) associates 16 894 (15 524) - Acquisition of investments (17 273) (85) - Proceeds from disposal of investments 8 396 - 68 500 Net cash from investing activities (5 012) (16 915) 82 999 Cash flows from financing activities Decrease in creditors (127) (32) (45) Increase/(decrease) in borrowings 1 230 1 142 (79 544) Shares repurchased (3 220) - - Net cash from financing activities (2 117) 1 110 (79 589) Net (decrease)/increase in cash and cash equivalents (30 499) (16 807) 10 672 Cash and cash equivalents at the beginning of the period/year 55 656 44 984 44 984 Total cash and cash equivalents at the end of the period/year 25 157 28 177 55 656 STATEMENT OF CHANGES IN EQUITY Share Share Total share capital premium capital
R`000 R`000 R`000 Balance at 1 September 2009 1 749 201 547 203 296 Total comprehensive income for the year - - - Loss for the year - - - Fair value gain on available-for-sale investments - - - Change in shareholding in subsidiary - - - Balance at 31 August 2010 1 749 201 547 203 296 Balance at 1 September 2010 1 749 201 547 203 296 Total comprehensive income for the period - - - Profit for the period - - - Fair value gain on available-for-sale investments - - - Share repurchases - - - Dividends paid - - - Change in shareholding in subsidiary - - - Balance at 28 February 2011 1 749 201 547 203 296 Treasury Fair value Accumulated shares reserve loss R`000 R`000 R`000
Balance at 1 September 2009 - 2 929 (64 977) Total comprehensive income for the year - 268 (7 132) Loss for the year - - (7 132) Fair value gain on available-for-sale investments - 268 - Change in shareholding in subsidiary - - 384 Balance at 31 August 2010 - 3 197 (71 725) Balance at 1 September 2010 - 3 197 (71 725) Total comprehensive income for the period - 2 505 4 997 Profit for the period - 4 997 Fair value gain on available-for-sale investments 2 505 - Share repurchases (3 220) - - Dividends paid - - (2 583) Change in shareholding in subsidiary - - 40 312 Balance at 28 February 2011 (3 220) 5 702 (28 999) Minority Total Total interest equity R`000 R`000 R`000 Balance at 1 September 2009 141 248 95 477 236 725 Total comprehensive income for the year (6 864) 4 349 (2 515) Loss for the year (7 132) 4 349 (2 783) Fair value gain on available-for-sale investments 268 - 268 Change in shareholding in subsidiary 384 (1 088) (704) Balance at 31 August 2010 134 768 98 738 233 506 Balance at 1 September 2010 134 768 98 738 233 506 Total comprehensive income for the period 7 502 538 8 040 Profit for the period 4 997 538 5 535 Fair value gain on available-for-sale investments 2 505 - 2 505 Share repurchases (3 220) - (3 220) Dividends paid (2 583) - (2 583) Change in shareholding in subsidiary 40 312 (80 513) (40 201) Balance at 28 February 2011 176 779 18 763 195 542 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 period ending 28 February 2011 comprise the company and its subsidiaries (together referred to as the "group") and the group`s interest in jointly controlled entities. The interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34: Interim Financial Reporting, AC 500 Standards as issued by the Accounting Practices Board, the Listings Requirements of the JSE Limited and the South African Companies Act. The interim financial statements have been prepared on the going concern basis using a combination of the historical cost and fair value bases of accounting. All significant accounting policies have been consistently applied to all periods presented and throughout the group. The consolidated interim financial statements are stated in Rands, which is the company`s functional and presentation currency. The preparation of interim 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. The interim financial statements has not been reviewed or audited by KPMG Inc. Unaudited Audited Six months ended Year ended 28 February 31 August
2011 2010 2010 R`000 R`000 R`000 2. Headline earnings per share reconciliation Headline earnings per share is calculated as follows: Profit/(loss) attributable to equity holders of the parent 4 997 18 549 (7 132) Realised loss on sale of associate - - 11 427 Impairment of investment - 11 426 469 (Reversal of impairment)/impairment of loan (861) 1 008 - Tax effects on available-for-sale investments, net of non-controlling interest - - 2 777 Headline earnings 4 136 30 983 7 541 Headline earnings per share (cents) 2.4 17.7 4.3 Diluted headline earnings per share (cents) 2.4 17.7 4.3 The calculation of headline earnings per share is based on the weighted average number of 174 325 620 shares in issue during the year (2010: 174 872 545). Domicile and registered office 2nd Floor, The Hudson, 30 Hudson Street, Cape Town, 8001 PO Box 7677, Roggebaai, 8012, South Africa Contact details Tel: 021 421 5550 Fax: 021 421 5551 Transfer secretaries Computershare Investor Services (Pty) Limited 70 Marshall Street, Johannesburg, 2001 Directors M Kaplan (Chairman)*, AJ Shapiro (CEO), AL Winkler (Financial Director), A Groll, AM Louw*, R Stumpf* * Non-executive Secretary S Litten Sponsor Sasfin Corporate Finance, a division of Sasfin Bank Limited Auditor KPMG Inc. 19 April 2011 Date: 19/04/2011 11:28:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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