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Unaudited Interim results for the six months ended 28 February 2013
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 2013
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 Feb 29 Feb 31 Aug
2013 2012 2012
Notes R'000 R'000 R'000
Revenue 9 912 12 358 19 702
Revenue - other from land sales 1 400 877 3 832
Trading (loss)/profit (12 666) (6 692) 318
Investment income 4 784 8 553 12 256
Finance costs (339) (732) (958)
Reversal of provision for impairment 2 958 1 274 3 987
Profit from equity accounted investment (net of tax) 8 082 2 622 7 419
Share-based payment expense 3 (724) (121) (843)
Profit before taxation 2 095 4 904 22 179
Taxation 627 1 076 (2 936)
Profit for the period/year 2 722 5 980 19 243
Other comprehensive income
Fair value gain on available-for-sale investments 3 120 (2 288) 1 508
Fair value gain on revaluation of property, plant
and equipment - - 2 302
Tax effects on revaluations (582) 320 (953)
2 538 (1 968) 2 857
Total comprehensive income for the year 5 260 4 012 22 100
Profit attributable to:
Equity holders of the parent 2 722 5 638 18 901
Non-controlling interest - 342 343
Profit for the period 2 722 5 980 19 244
Total comprehensive income attributable to:
Equity holders of the parent 5 260 3 670 21 757
Non-controlling interest - 342 343
5 260 4 012 22 100
Earnings per share
Number of shares issued (thousands) 178 096 173 821 178 096
Weighted average number of shares (thousands) 176 761 173 821 174 553
Earnings per share (cents) 1.5 3.2 10.8
Diluted earnings per share (cents) 1.4 3.2 10.4
Headline earnings per share (cents) 4 1.5 2.5 6.8
Diluted headline earnings per share (cents) 1.4 2.5 6.5
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
28 Feb 29 Feb 31 Aug
2013 2012 2012
Notes R'000 R'000 R'000
ASSETS
Non-current assets 173 307 150 358 159 857
Property, plant and equipment 7 877 12 194 6 500
Investment properties 22 170 11 266 21 098
Investments 19 240 12 324 16 120
Investments in joint ventures 40 814 31 486 28 985
Investments in associate entities 82 215 81 373 85 582
Deferred tax asset 991 1 715 1 572
Current assets 83 638 58 789 96 680
Loans receivable 17 139 10 291 14 181
Trade and other receivables 4 831 5 208 4 156
Investments - 11 054 17 175
Inventory 28 030 28 824 28 396
Tax receivable 2 11 2
Cash and cash equivalents 33 636 3 401 32 770
Non-current assets held for sale 2 - 29 443 -
Total assets 256 945 238 590 256 537
EQUITY AND LIABILITIES
Equity 215 014 199 828 214 758
Share capital and share premium 209 259 203 296 209 259
Treasury shares (2 559) (1 276) (1 239)
Fair value reserve 10 694 3 331 8 156
Share-based payments reserve 3 1 567 121 843
Accumulated loss (3 947) (16 695) (2 261)
Total equity attributable to equity holders of
the parent 215 014 188 777 214 758
Non-controlling interest - 11 051 -
Non-current liabilities 12 760 4 450 11 423
Loans payable 6 533 - 5 794
Deferred tax liability 6 227 4 450 5 629
Current liabilities 29 171 34 312 30 356
Loans payable 884 5 400 884
Creditors - 6 898 -
Tax payable 9 9 27
Trade and other payables 28 278 20 679 28 072
Derivative instruments - - 1 373
Bank overdraft - 1 326 -
Total equity and liabilities 256 945 238 590 256 537
Net asset value per share (cents) 121 109 121
STATEMENTS OF CASH FLOW
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 Feb 29 Feb 31 Aug
2013 2012 2012
R'000 R'000 R'000
Cash flows from operating activities
Cash utilised in operations (3 110) (5 142) (8 261)
Finance income 2 808 2 537 3 321
Dividends received 1 976 6 016 6 016
Dividends received from associate 8 891 4 446 4 446
Finance costs (339) (732) (958)
Dividend paid (4 408) (3 476) (3 476)
Tax received/(paid) 634 - (3 938)
Net cash from operating activities 6 452 3 649 (2 850)
Cash flows from investing activities
Acquisition of property, plant and equipment (1 766) (2 975) (3 599)
Acquisition of and addition to investment property (1 072) (6 817) (8 425)
Decrease in loans receivable - 1 568 392
Derivative instrument settled (10 421) - -
Proceeds on sale of associate - - 40 672
Loan advanced to jointly controlled entities
and associates (9 270) (18 904) (14 113)
Acquisition of held-for-trading and available-for-
sale investments (2 165) (15 560) (23 791)
Proceeds from disposal of investments 19 689 11 245 15 990
Net cash from investing activities (5 005) (31 443) 7 126
Cash flows from financing activities
Change in shareholding of subsidiary - - (2 840)
Acquisition of treasury shares (1 320) - -
Decrease in creditors - (186) -
Increase/(decrease) in borrowings 739 (10 775) (9 496)
Net cash from financing activities (581) (10 961) (12 336)
Net increase/(decrease) in cash and cash equivalents 866 (38 755) (8 060)
Cash and cash equivalents at the beginning of the
period/year 32 770 40 830 40 830
Total cash and cash equivalents at the end of the
period/year 33 636 2 075 32 770
STATEMENT OF CHANGES IN EQUITY
Total
Share Share share Treasury
capital premium capital shares
R'000 R'000 R'000 R'000
Balance at 1 September 2011 1 749 201 547 203 296 (1 277)
Total comprehensive income for the year - - - -
Profit for the year - - - -
Fair value gain on available-for-sale
investments - - - -
Fair value gain on revaluation of property,
plant and equipment - - - -
Tax effects on revaluations - - - -
Net share sales - - - 38
Share-based payment - - - -
Dividends paid - - - -
Issue of ordinary shares to acquire balance
of shares in subsidiary 32 5 931 5 963 -
Balance at 31 August 2012 1 781 207 478 209 259 (1 239)
Balance at 1 September 2012 1 781 207 478 209 259 (1 239)
Total comprehensive income for the year - - - -
Profit for the period - - - -
Fair value gain on available-for-sale
investments - - - -
Tax effects on revaluations - - - -
Share purchases - - - (1 320)
Share-based payment - - - -
Dividends paid - - - -
Change in shareholding in subsidiary - - - -
Balance at 28 February 2013 1 781 207 478 209 259 (2 559)
Share-
Fair based Accumu-
value payment lated
reserve reserve loss Total
R'000 R'000 R'000 R'000
Balance at 1 September 2011 5 299 - (18 857) 188 461
Total comprehensive income for the year 2 857 - 18 901 21 758
Profit for the year - - 18 901 18 901
Fair value gain on available-for-sale
investments 1 508 - - 1 508
Fair value gain on revaluation of property,
plant and equipment 2 302 - - 2 302
Tax effects on revaluations (953) - - (953)
Net share sales - - - 38
Share-based payment - 843 - 843
Dividends paid - - (3 476) (3 476)
Issue of ordinary shares to acquire balance
of shares in subsidiary - - 1 171 7 134
Balance at 31 August 2012 8 156 843 (2 261) 214 758
Balance at 1 September 2012 8 156 843 (2 261) 214 758
Total comprehensive income for the year 2 538 - 2 722 5 260
Profit for the period - - 2 722 2 722
Fair value gain on available-for-sale
investments 3 120 - - 3 120
Tax effects on revaluations (582) - - (582)
Share purchases - - - (1 320)
Share-based payment - 724 - 724
Dividends paid - - (4 408) (4 408)
Change in shareholding in subsidiary - - - -
Balance at 28 February 2013 10 694 1 567 (3 947) 215 014
Minority Total
interest equity
R'000 R'000
Balance at 1 September 2011 10 709 199 170
Total comprehensive income for the year 343 22 101
Profit for the year 343 19 244
Fair value gain on available-for-sale investments - 1 508
Fair value gain on revaluation of property, plant and equipment - 2 302
Tax effects on revaluations - (953)
Net share sales - 38
Share-based payment - 843
Dividends paid - (3 476)
Issue of ordinary shares to acquire balance of shares
in subsidiary (11 052) (3 918)
Balance at 31 August 2012 - 214 758
Balance at 1 September 2012 - 214 758
Total comprehensive income for the year - 5 260
Profit for the period - 2 722
Fair value gain on available-for-sale investments - 3 120
Tax effects on revaluations - (582)
Share purchases - (1 320)
Share-based payment - 724
Dividends paid - (4 408)
Change in shareholding in subsidiary - -
Balance at 28 February 2013 - 215 014
NOTES
1 PRESENTATION OF ANNUAL FINANCIAL STATEMENTS
Trematon Capital Investments Limited (the "company") is a company domciled in South
Africa. The consolidated financial statements of the company for the period ending
28 February 2013 comprise the company and its subsidiaries (together referred to as
the "group") and the group's interest in jointly controlled entities and associates.
The interim financial statements contain the information required by IAS 34: Interim
Financial Reporting and have been prepared in accordance with the framework concepts
and the measurement and recognition requirements of IFRS and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, the Listings
Requirements of the JSE Limited and the South African Companies Act. The accounting
policies are in accordance with IFRS and the same accounting policies and method of
computation are followed in these interim financial statements as compared with the
most recent annual financial statements.
The interim financial statements have been prepared on the going concern basis using
a combination of the historical cost and fair value basis 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 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 Mazars.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 Feb 29 Feb 31 Aug
2013 2012 2012
R'000 R'000 R'000
2 NON-CURRENT ASSETS HELD FOR SALE
Carrying value of non-current asset held for sale - 29 443 -
The company entered into an agreement to dispose of
its 37.5% interest in the Boulevard Park Trust ("BPT")
as disclosed in the SENS released on 26 March 2012.
The investment in the BPT was accounted for as an
investment in associate in prior periods. In terms of
IFRS, the investment has been carried at the lower of
carrying value or fair value less costs to sell and
reclassified to non-current assets held for sale.
3 SHARE-BASED PAYMENT RESERVE
Share-based payment expense in terms of the Trematon
Share Incentive Scheme 724 121 843
In terms of the scheme, which was approved at the annual
general meeting of the company on 25 January 2012,
participants were issued convertible debentures that can
be converted into ordinary shares at the option of the
participant after a period of three years.
The debentures pay interest at a rate linked to the
prime rate of borrowing.
A corresponding loan was issued to participants at a rate
linked to the prime rate of borrowing. This loan was
approved simultaneously with the issue of debentures at
the annual general meeting mentioned above.
In terms of IFRS 2: Share-based payments, the convertible
debentures and corresponding loans receivable have been
eliminated in the preparation of these results. The
required share-based payment expense has been recognised
as an expense and an adjustment to equity.
4 HEADLINE EARNINGS PER SHARE RECONCILIATION
Headline earnings per share is calculated as follows:
Profit attributable to equity holders of the parent 2 722 5 638 18 901
Realised profit on sale of associate - - (7 072)
Tax effects on fair value adjustment of non-current
assets held for sale - - -
Headline earnings 2 722 5 638 11 829
Headline earnings per share (cents) 1.5 2.5 6.8
Diluted headline earnings per share (cents) 1.4 2.5 6.5
The calculation of headline earnings per share is based on the weighted average number
of 176 761 091 ordinary shares in issue during the period (2012: 173 821 416).
5 SEGMENTAL INFORMATION
Property
invest- Un-
Gaming ments allocated
R'000 R'000 R'000
Unaudited six months ended 28 February 2013
Revenue 1 975 7 937 -
Profit/(loss) for the period 9 499 (6 812) 2 235
Total assets 101 455 140 397 18 132
Total liabilities - 44 970 -
Unaudited six months ended 29 February 2012
Revenue 6 015 6 169 174
Profit/(loss) for the period 9 960 5 832 (2 826)
Total assets 101 671 123 372 13 547
Total liabilities - 38 762 -
Audited year ended 31 August 2012
Revenue 6 015 13 686 1
Profit/(loss) for the period 15 725 8 311 (4 792)
Total assets 116 203 137 660 16 856
Total liabilities - 41 780 -
Elimin-
ations Total
R'000 R'000
Unaudited six months ended 28 February 2013
Revenue - 9 912
Profit/(loss) for the period (2 200) 2 722
Total assets - 259 984
Total liabilities - 44 970
Unaudited six months ended 29 February 2012
Revenue - 12 358
Profit/(loss) for the period (6 986) 5 980
Total assets - 238 590
Total liabilities - 38 762
Audited year ended 31 August 2012
Revenue - 19 702
Profit/(loss) for the period - 19 244
Total assets - 270 719
Total liabilities - 41 780
DIRECTORS' REVIEW
COMMENTARY ON FINANCIAL RESULTS
Net asset value ("NAV") has remained unchanged since year-end at 121 cents per share.
The group remains in a healthy financial position. On a consolidated basis the group
is in a net cash position although our property associates have appropriate gearing
associated with specific investments.
Interim earnings per share decreased by 53% to 1.5 cents per share (2012: 3.2 cents
per share). Headline earnings fell by 40% to 1.5 cents per share (2012: 2.5 cents
per share).
The reason for the drop in earnings is a R9 million once-off charge in the income
statement which arose from the settlement of a call option in respect of 3.5 million
ordinary shares in Club Mykonos Langebaan (Pty) Limited ("CML"). The option arose
from an incentive structure which was put in place to compensate a party who was
instrumental in the original Club Mykonos transaction. Trematon continues to own 100%
of the shares in CML and there is no further exposure in this regard.
Revenue for the group includes interest income, dividends and sale of properties at
Club Mykonos in Langebaan. The revenue figure is included for disclosure purposes in
terms of IFRS requirements but is not an accurate reflection of the level of activity
within the group. Revenue declined to R9.9 million (2012: R12.4 million) due to
special dividends received in the prior period as well as a decline in interest
received on loans that have been repaid.
Total trading losses before other forms of income but including the R9 million charge
referred to above amounted to R12.7 million (2012: R6.7 million). Share trading
losses were also incurred on the final realisation of all shares held in Dorbyl Limited
- the losses were partially offset by profits on other share trades. All holdings are
marked-to-market at the end of the reporting period.
Investment income has declined due to the repayment of loans previously extended to
joint ventures.
The reversal of provision for impairment is due to the improvement in the performance
of the listed shares held in Cloudberry Investments. The increase of the NAV of the
entity is directly related to the value of the loans due from the investment.
Profit from equity accounted investments include equity accounted profits from Arbitrage
Property Fund, Resi Investment Trust and the Mykonos Casino. All of these investments
have shown improved growth over the interim period, contributing to an increase in
equity accounted earnings over the prior comparable interim period.
Trematon's investment in joint ventures has increased due to additional funding of
R9.3 million for the purchase of properties as well as earnings recognised which
increase the carrying value of the investments.
Cash balances amounted to R33.6 million at the end of the period. This balance is
variable during the year and depends on the timing of investments and realisations.
INVESTMENT OVERVIEW
CLUB MYKONOS LANGEBAAN
The CML group made a profit for the period of R7.6 million compared to a profit of
R4.5 million in the prior comparable interim period. The major component of the profits
is the equity accounted profits from the Mykonos Casino. The resort continues to show
improvement due to ongoing operational refinements and the results of the refurbishment
programme. Both rental and timeshare occupancies are high by industry standards and
revenues from commercial operations are showing good levels of growth. Club Mykonos
offers a family-friendly resort holiday experience and the investment in the brand
has shown positive results which are reflected in increased turnover and increased
foot traffic.
At the RCI "OSCA" awards held in March 2013, Club Mykonos was rated amongst the top 4
large resorts in the country in the premier Gold Crown Category and the resort
general manager was recognised by a nomination for general manager of the year.
Club Mykonos is now firmly established as one of the favoured family holiday
destinations in the country and has recently been awarded a 4-star grading by the
Tourism Grading Council of South Africa.
The Club Mykonos Marina continues to expand, the number of jetties has been increased
further to the limits of the current space available and the Mykonos Boatyard is now
well established as a value-added boating and general storage facility offering
storage for 140 large and medium sized crafts. Phase 2 of the boatyard has commenced
and storage units are being constructed as demand dictates.
There is significant potential for new developments at the resort when market
circumstances are suitable.
ARBITRAGE PROPERTY FUND ("ARBITRAGE") - 50% INTEREST
Arbitrage continues to focus on value opportunities in the commercial and industrial
property space. The low yields prevailing in the sector and the large increase in
demand from listed property vehicles have reduced the number of opportunities which
are available. The current portfolio is performing very well and new investments will
be made on a selective basis. Properties with a cost price of R188 million has been
purchased to date. Trematon has increased its mezzanine funding to Arbitrage to a
total of R22.3 million at the end of the period.
RESI INVESTMENT TRUST ("RESI") - 50% INTEREST
Resi is a property investment fund that is focused on purchasing well priced and well
located residential developments. The fund has established an excellent track record
in the Western Cape where a total of R170 million of transactions have been finalised
to date. Most of these transactions are in the final stages of transfer and should be
reflected in the full year accounts. Deal flow in this area is still strong and further
investments are anticipated in the Western Cape and nationwide.
Trematon has increased its mezzanine funding to Resi to a total of R15.5 million at
the end of the period.
OTHER
The group has maintained its investment in Grand Parade Investments Limited which is
held directly and indirectly to a value of R32.8 million.
Stalagmite Property Investments (Pty) Limited remains in a sound financial position and
will become more active once there is more certainty regarding the proposed N2 highway.
The indirect shareholding in Mazor Group Limited has been maintained.
DISCLOSURE
At present the group has significant property exposure held via its joint venture
entities. The rental income, operating expenses, valuations and debt associated with
these properties are not fully reflected on the face of the financials. The group is
currently exploring alternatives which would make the presentation of the financials
more meaningful in this context.
SUBSEQUENT EVENTS
Subsequent to the period-end, Trematon entered into agreement in terms of which it
purchased a further 16.7% interest in Arbitrage Property Fund (Pty) Limited for a
consideration of R4.2 million. The effective date of the transaction was
31 March 2013. This purchase will increase Trematon's holding in Arbitrage to 66.7%,
resulting in Arbitrage being a subsidiary of Trematon from the effective date.
PROSPECTS
The group has permanent exposure to 3 primary sectors: commercial property,
residential property and leisure assets (including casinos). In addition, short-term
arbitrage or trading opportunities are pursued as they present themselves.
The level of annuity income in the group and the quality of the NAV has increased
over the past few reporting periods although earnings can always be influenced in the
short term by investment realisations or trading profits and losses.
Domicile and registered office: 2nd Floor, The Hudson, 30 Hudson Street,
Cape Town, 8001. PO Box 7677, Roggebaai, 8012, South Africa
Transfer secretaries: Link Market Services South Africa (Pty) Limited,
19 Ameshoff Street, Braamfontein
Directors: M Kaplan (Chairman)*#, AJ Shapiro (Chief Executive Officer),
AL Winkler (Chief Financial Officer), JP Fisher*#, A Groll, AM Louw*#, R Stumpf*
* Non-executive # Independent
Secretary: S Litten
Sponsor: Sasfin Capital, a division of Sasfin Bank Limited
Auditor: Mazars
Published date: 29 April 2013
Prepared by: The group interim financial results have been prepared under the
supervision of the chief financial officer, Mr AL Winkler CA(SA).
Contact details: Tel: (021) 421 5550, Fax: (021) 421 5551
Date: 29/04/2013 10:34:00 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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