Wrap Text
Unaudited Interim Results
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 2014
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
ASSETS
Non-current assets 271 779 173 307 236 886
Property, plant and equipment 8 583 7 877 8 572
Investment properties 136 867 22 170 109 397
Investments 14 879 19 240 16 380
Investments in joint ventures 12 949 40 814 11 553
Investments in associate entities 92 300 82 215 86 579
Deferred tax asset 6 201 991 4 405
Current assets 266 253 83 638 129 866
Loans receivable 24 342 17 139 17 585
Trade and other receivables 18 214 4 831 9 734
Investments 11 799 - 2 555
Inventories 167 554 28 030 65 311
Current tax assets 155 2 1
Cash and cash equivalents 44 189 33 636 34 680
Non-current assets held for sale (note 2) - - 146 403
Total assets 538 032 256 945 513 155
EQUITY AND LIABILITIES
Equity 288 626 215 014 282 849
Share capital and share premium 209 259 209 259 209 259
Treasury shares (2 559) (2 559) (2 559)
Fair value reserve 9 730 10 694 9 455
Share-based payments reserve 3 232 1 567 2 310
Accumulated profit/(loss) 50 602 (3 947) 44 829
Total equity attributable to
equity holders of the parent 270 264 215 014 263 294
Non-controlling interest 18 362 - 19 555
Non-current liabilities 204 175 12 760 188 210
Loans payable 188 126 6 533 172 070
Deferred tax liability 16 049 6 227 16 140
Current liabilities 45 231 29 171 42 096
Loans payable 8 687 884 8 663
Current tax payable 7 430 9 122
Trade and other payables 29 114 28 278 33 311
Total equity and liabilities 538 032 256 945 513 155
Net asset value per share (cents) 153 121 149
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Revenue 31 037 9 934 34 329
Realised profit on available-for-sale investments 3 657 - 2 063
Realised loss on settlement of derivative
instrument - (9 048) (9 048)
Realised profit/(loss) on held-for-trading
investments 816 (3 690) (3 743)
Realised profit on sale of non-current assets 11 - 1 008
Gain on change in shareholding 1 034 - 3 420
Total realised profit/(loss) 36 555 (2 804) 28 029
Fair value adjustment on held-for-trading
investments (4 332) 3 481 4 474
Fair value adjustment on investment properties - - 18 730
Fair value adjustment on deemed disposal of
investment in joint venture 2 229 - 3 457
Reversal of impairment of loan 6 756 2 958 3 405
Total profit from fair value adjustments 4 653 6 439 30 066
Employee benefits (6 922) (5 097) (11 070)
Cost of sales of property and land (6 639) (1 686) (7 535)
Other operating expenses (16 324) (2 500) (13 140)
Operating profit/(loss) 11 323 (5 648) 26 350
Finance costs (7 296) (339) (7 092)
Profit from equity accounted investments
(net of tax) 5 565 8 082 30 477
Profit before income tax 9 592 2 095 49 735
Income tax (2 014) 627 4 131
Profit for the year 7 578 2 722 53 866
Other comprehensive income
Fair value gain on available-for-sale
investments 3 995 3 120 4 068
Reclassification adjustment on sale of
available-for-sale investments (3 657) - (2 062)
Tax effects on revaluations (63) (582) (707)
Other comprehensive income for the year 275 2 538 1 299
Total comprehensive income for the year 7 853 5 260 55 165
Profit attributable to:
Equity holders of the parent 11 504 2 722 51 498
Non-controlling interest (3 926) - 2 368
Profit for the period 7 578 2 722 53 866
Total comprehensive income attributable to:
Equity holders of the parent 11 779 5 260 52 797
Non-controlling interest (3 926) - 2 368
7 853 5 260 55 165
Earnings per share
Number of shares issued (thousands) 176 323 178 096 176 323
Weighted average number of shares (thousands) 176 323 176 761 176 540
Earnings per share (cents) 6.5 1.5 29.2
Diluted earnings per share (cents) 6.1 1.4 27.2
Headline earnings per share (cents) (note 3) 2.5 1.5 7.5
Diluted headline earnings per share (cents) 2.3 1.4 7.0
STATEMENT OF CHANGES IN EQUITY
Total Fair
Share Share Treasury share value
capital premium shares capital reserve
R'000 R'000 R'000 R'000 R'000
Balance at 1 September 2012 1 781 207 478 (1 239) 208 020 8 156
Total comprehensive income for
the period - - - - 2 538
Profit for the period - - - - -
Fair value gain on available-
for-sale investments - - - - 3 120
Tax effects on revaluations - - - - (582)
Share purchases - - (1 320) (1 320) -
Share-based payment - - - - -
Dividends paid - - - - -
Balance at 28 February 2013 1 781 207 478 (2 559) 206 700 10 694
Balance at 1 March 2013 1 781 207 478 (2 559) 206 700 10 694
Total comprehensive income for
the period - - - - (1 239)
Profit for the period - - - - -
Fair value gain on available-
for-sale investments - - - - 948
Reclassification adjustment on sale
of available-for-sale investments - - - - (2 062)
Tax effects on revaluations - - - - (125)
Share-based payment - - - - -
Non-controlling interest on
acquisition of subsidiaries - - - - -
Balance at 31 August 2013 1 781 207 478 (2 559) 206 700 9 455
Balance at 1 September 2013 1 781 207 478 (2 559) 206 700 9 455
Total comprehensive income for
the period - - - - 275
Profit for the period - - - - -
Fair value gain on available-
for-sale investments - - - - 3 995
Reclassification adjustment on sale
of available-for-sale investments - - - - (3 657)
Tax effects on revaluations - - - - (63)
Share-based payment - - - - -
Dividends paid - - - - -
Non-controlling interest on
acquisition of subsidiaries - - - - -
Balance at 28 February 2014 1 781 207 478 (2 559) 206 700 9 730
Share- Accumu-
based lated Non-con-
payment profit/ trolling Total
reserve (loss) Total interest equity
R'000 R'000 R'000 R'000 R'000
Balance at 1 September 2012 843 (2 261) 214 758 - 214 758
Total comprehensive income for
the period - 2 722 5 260 - 5 260
Profit for the period - 2 722 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) - (1 320)
Share-based payment 724 - 724 - 724
Dividends paid - (4 408) (4 408) - (4 408)
Balance at 28 February 2013 1 567 (3 947) 215 014 - 215 014
Balance at 1 March 2013 1 567 (3 947) 215 014 - 215 014
Total comprehensive income for
the period - 48 776 47 537 2 368 49 905
Profit for the period - 48 776 48 776 2 368 51 144
Fair value gain on available-
for-sale investments - - 948 - 948
Reclassification adjustment on sale
of available-for-sale investments - - (2 062) - (2 062)
Tax effects on revaluations - - (125) - (125)
Share-based payment 743 - 743 - 743
Non-controlling interest on
acquisition of subsidiaries - - - 17 187 17 187
Balance at 31 August 2013 2 310 44 829 263 294 19 555 282 849
Balance at 1 September 2013 2 310 44 829 263 294 19 555 282 849
Total comprehensive income for
the period - 11 504 11 779 (3 926) 7 853
Profit for the period - 11 504 11 504 (3 926) 7 578
Fair value gain on available-
for-sale investments - - 3 995 - 3 995
Reclassification adjustment on sale
of available-for-sale investments - - (3 657) - (3 657)
Tax effects on revaluations - - (63) - (63)
Share-based payment 922 - 922 - 922
Dividends paid - (5 731) (5 731) - (5 731)
Non-controlling interest on
acquisition of subsidiaries - - - 2 733 2 733
Balance at 28 February 2014 3 232 50 602 270 264 18 362 288 626
STATEMENTS OF CASH FLOW
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Cash flows from operating activities
Cash (utilised)/generated in operations (107 207) (3 110) 5 093
Finance income 1 400 2 808 3 272
Dividends received 1 771 1 976 1 975
Dividends received from associate - 8 891 8 891
Finance costs (7 296) (339) (7 092)
Dividend paid (5 731) (4 408) (4 408)
Tax (paid)/received (486) 634 (418)
Net cash from operating activities (117 549) 6 452 7 313
Cash flows from investing activities
Acquisition of property, plant and equipment (582) (1 766) (2 876)
Acquisition of and addition to investment
property (27 470) (1 072) (1 657)
Proceeds from disposal of investment properties 146 403 - -
Proceeds on disposal of non-current assets 60 - 5 488
Business combination (note 7) (61) - (488)
Loan advanced to joint ventures and associates (3 133) (9 270) (15 913)
Acquisition of held-for-trading and available-
for-sale investments (15 492) (2 165) (7 454)
Proceeds from disposal of investments 11 253 19 689 27 088
Net cash from investing activities 110 978 5 416 4 188
Cash flows from financing activities
Treasury share purchases - (1 320) (1 320)
Settlement of derivative instrument - (10 421) (10 421)
Increase in borrowings 16 080 739 2 150
Net cash from financing activities 16 080 (11 002) (9 591)
Net increase in cash and cash equivalents 9 509 866 1 910
Cash and cash equivalents at the beginning
of the period/year 34 680 32 770 32 770
Total cash and cash equivalents at the end
of the period/year 44 189 33 636 34 680
NOTES
1 PRESENTATION OF ANNUAL FINANCIAL STATEMENTS
Trematon Capital Investments Limited (the "company") is a company domiciled in
South Africa. The interim consolidated financial statements of the company for the
period ending 28 February 2014 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 except for the adoption of the new accounting
standards and amendments detailed below.
The group has adopted the following new accounting standards and amendments, which
all became effective in the interim period ended 28 February 2014, in preparation
of these interim results:
IFRS 10: Consolidated Financial Statements
IFRS 10 addresses the divergence arising from the control-based principles in IAS 27
and the risks and rewards-based approach in SIC 12. The standard sets out a new
definition of control, which exists only when an entity is exposed to, or has rights
to, variable returns from its involvement with the entity, and has the ability to
effect those returns through power over the investee.
Management has reassessed the control conclusion for each of its investees at
1 September 2013. No changes were identified and the adoption of this standard has
thus no impact on the interim financial results.
IFRS 11: Joint Arrangements
The standard defines a joint arrangement as existing only when decisions about
relevant activities require the unanimous consent of the parties sharing joint
control in terms of a contractual arrangement. The standard identifies two types of
joint arrangements as:
- Joint operations which exist when the entities sharing joint control have direct
rights to the assets and obligations for the liabilities of the joint arrangements.
In such cases the joint operators recognise their share of the assets and
liabilities and profits and losses of the joint arrangements in their financial
statements.
- Joint ventures which exist when the parties with joint control have rights to the
net assets of the arrangement. A joint venturer accounts for its investment using
the equity method.
Management has re-evaluated the group's involvement in the various joint arrangements
and no changes were identified.
IFRS 13: Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement
date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the
asset or liability.
The fair value of an asset or a liability is measured using the assumptions that
market participants would use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would use
the asset in its highest and best use.
The group has applied the new fair value measurement guidance prospectively.
Notwithstanding the above, the change had no significant impact on the measurements
of the group's assets and liabilities.
IAS 32: Financial Instruments Presentation
Income tax relating to distributions to equity holders and transaction costs of
equity transactions are accounted for in accordance with IAS 12.
No changes were identified and the adoption of this standard has thus no impact on
the interim financial results.
IAS 36: Impairment of Assets
Disclosure requirements for recoverable amount where the recoverable amount of
impaired assets is based on fair value less costs of disposal. No changes were
identified and the adoption of this standard has thus no impact on the interim
financial results.
Other standards or interpretations that have been issued and are effective, have
not been adopted by the group as they are not applicable to its activities.
The consolidated interim financial statements are stated in Rands, which is the
company's functional and presentation currency.
In preparing the annual financial statements, management is required to make estimates
and assumptions that affect the amounts represented in the annual financial statements
and related disclosures. Use of available information and the application of judgement
is inherent in the formation of estimates. Actual results in the future could differ
from these estimates which may be material to the annual financial statements.
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
and in any future periods affected.
The interim financial statements has not been reviewed or audited by Mazars Inc.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
2 NON-CURRENT ASSETS HELD FOR SALE
Carrying value of non-current asset
held for sale - - 146 403
The company entered into agreements to dispose of three investment properties.
The investment properties, in terms of IFRS had been carried at fair value and
reclassified to non-current assets held for sale. The properties were disposed of
in the current period.
3 HEADLINE EARNINGS PER SHARE RECONCILIATION
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Gross Net Gross Net Gross Net
Profit attributable to
equity holders of the
parent 11 504 2 722 51 498
Gain on acquisition of
subsidiary (1 034) (1 034) - - (3 420) (3 420)
Fair value adjustment on
deemed disposal of
investment in joint
venture (2 229) (2 229) - - (3 457) (3 457)
Fair value adjustment on
investment properties - - - - (18 730) (12 405)
Realised profit on
available-for-sale
investments (3 657) (2 974) - - (2 063) (1 678)
Fair value adjustments
within equity accounted
profits (1 317) (948) - - (21 183) (17 223)
Headline earnings 4 319 2 722 13 315
Headline earnings per
share (cents) 2.5 1.5 7.5
Diluted headline earnings
per share (cents) 2.3 1.4 7.0
4 SEGMENTAL INFORMATION
Property
invest- Unallo- Elimin-
Gaming ments cated ations Total
R'000 R'000 R'000 R'000 R'000
Unaudited six months ended
28 February 2014
Revenue 1 336 29 701 - - 31 037
Profit/(loss) for the period 7 057 (705) 3 240 - 9 592
Total assets 107 179 394 712 36 141 - 538 032
Total liabilities - 249 406 - - 249 406
Unaudited six months ended
28 February 2013
Revenue 1 975 7 937 - - 9 934
Profit/(loss) for the period 9 499 (6 812) 2 235 (2 200) 2 095
Total assets 101 455 140 397 18 132 - 256 945
Total liabilities - 44 970 - - 41 931
Audited year ended
31 August 2013
Revenue 3 295 31 034 - - 34 329
Profit for the year 18 654 25 423 5 658 - 49 735
Total assets 102 959 390 056 20 140 - 513 155
Total liabilities - 230 306 - - 230 306
5 BUSINESS COMBINATIONS
Stalagmite Property Investments (Pty) Limited ("Stalagmite")
On 18 November 2013, the group obtained a controlling interest of Stalagmite by
acquiring an additional 16.7% of the share capital of the company for a total cash
consideration of R0.33 million. The acquisition has resulted in an increased
share holding to 66.7% in Stalagmite.
The acquisition was made in terms of an agreement whereby one of our joint venture
partners decided to sell his interest in the company. We felt that the company was
placed in a strong position to take advantage of any future opportunities and that
there is future growth in the business. This resulted in us purchasing the
additional shares.
Details of the business combination are as follows:
Unaudited
Six months ended
28 February
2014
R'000
Amount settled in cash 333
Fair value of previously held investment 4 100
Fair value of consideration transferred 4 433
Non-controlling interest 2 733
Recognised amounts of identifiable net assets:
Inventory 8 816
Cash and cash equivalents 272
Tax receivable 156
Trade and other receivables 22
Deferred tax (738)
Other liabilities (51)
Trade and other payables (277)
Net identifiable assets and liabilities 8 200
Gain on change in shareholding (bargain purchase) (1 034)
Previously held investment/deemed disposal
On the acquisition date, the group's 50% investment in Stalagmite, previously
accounted for as an equity accounted investment has been remeasured to fair value.
The previously held investment is considered part of what was given up by the group
to obtain control of Stalagmite. A fair value gain of R2.2 million was recognised
on the acquisition date. This has been presented as a separate line item in the
consolidated statement of comprehensive income.
Non-controlling interest
The non-controlling interest in Stalagmite is measured at their share of the fair
value of the assets and liabilities of the acquiree at acquisition date.
Bargain purchase from additional shares acquired
A bargain purchase of R1.03 million was recognised on the acquisition date. This
has been presented as a separate line item in the consolidated statement of
comprehensive income.
6 COMPARATIVE FIGURES
The presentation of the comparative interim statements of comprehensive income has
been changed to conform to that of the current interim period and prior year
statements of comprehensive income (by nature) in order to improve clarity and
comparability. The change in presentation has resulted in the disclosure of
additional items, but has not resulted in a material change to the revenue or profit
before income tax line items.
7 RESTATEMENT - STATEMENT OF CASH FLOW
The settlement of a derivative instrument amounting to R10.4 million reflected in the
unaudited interim results for the six months ended 28 February 2013 has been
reclassified from cash flows from investing activities to cash flows from financing
activities. The classification is now in line with the audited results for the year
ended 31 August 2013.
INTRINSIC VALUE REPORT
An intrinsic value report has been prepared to improve shareholder communication. The
group's financial results have been prepared in terms of IFRS standards, which in some
cases does not allow for certain investments to be shown at their market values, such
as investments in associates and joint ventures as well as investments in properties
held as inventory.
The intrinsic net asset value of the group includes valuations of all investment
categories.
These valuations are either based on their listed market value, external professional
valuers or directors' valuations.
The following factors are taken into account in determining the directors' valuations
of various assets/investments:
- Market value and earnings yield of similar companies/operations, taking into account
the earnings, risk and tradeability thereof
- Current market prices realised for similar assets
- Earnings yields and the underlying growth potential
28 February 2014 31 August 2013
Book Intrinsic Book Intrinsic
value value value value
Note R'000 R'000 R'000 R'000
Listed shares 1 26 678 26 678 18 935 18 935
Cloudberry Investments 18 (Pty) Ltd 2 24 342 24 342 17 586 17 586
Stalagmite Property Investments
(Pty) Ltd 3 3 263 8 800 922 7 500
Club Mykonos Langebaan 4 161 591 301 319 149 996 257 639
Arbitrage Property Fund (Pty) Ltd
Commercial property 3 100 562 100 562 218 276 218 276
Residential Property Fund (Resi)
Residential property 3 146 513 213 300 44 800 44 800
Cash on hand 5 44 189 44 189 34 680 34 680
Other assets 5 30 894 30 894 27 960 27 960
Total assets 538 032 750 084 513 155 627 375
Liabilities 5 249 406 249 406 230 306 230 306
Non-controlling interests 5 18 362 18 362 19 555 19 555
Net assets (attributable to
equity holders) 270 264 482 316 263 294 377 515
Intrinsic net asset value per share
(cents) 153 274 149 214
Notes:
1 Valuation based on quoted market prices at year-end.
2 Valuation based on net asset value of company using quoted market prices at year-end,
less debt in the company.
3 Directors' valuation taking into account current market prices for similar assets as
well as the earnings, risk and tradeability thereof.
4 Valuation of assets at Club Mykonos based on current market prices of similar assets
and earnings, where applicable.
5 Market value equals book value.
DIRECTORS' REVIEW
FINANCIAL REVIEW
Net asset value ("NAV") has increased by 26% to 153 cents per share when compared to
the previous interim results.
Interim earnings per share increased by 333% to 6.5 cents (2013: 1.5 cents) and
headline earnings per share increased by 67% to 2.5 cents (2013: 1.5 cents).
No fair value adjustments are recognised on investment properties at the interim stage.
Revenue for the interim period was R31 million, which included interest, dividends,
rental income and sales of land and properties. This is an increase of R21.1 million
on the comparable period. The main contributor to the increase is the inclusion of
rental income from both Arbitrage Property Fund (Pty) Ltd ("Arbitrage") and the Resi
Investment Group ("Resi") and sale of properties held in Resi as inventory. Both
Arbitrage and Resi were not consolidated in the previous interim results. Trematon
consolidated Arbitrage and Resi effective 31 March 2013 and 1 March 2013 respectively,
which is the date it obtained effective control in those investments.
A profit of R3.7 million was realised on the sale of shares previously held as
available-for-sale. Fair value adjustments on held-for-trading investments resulted
in a loss of R4.3 million.
A reversal of impairment of R6.8 million was recognised on the loan to Cloudberry
Investments 18 (Pty) Ltd ("Cloudberry"). The improvement in the value of this
investment is mainly due to the sale of shares held in Cloudberry that realised a
capital profit.
Operating expenses have increased over the prior interim period due to the
consolidation of both Arbitrage and Resi. These investments were equity accounted in
the previous interim period. They were consolidated for the second half of the 2013
year-end which was the majority of the operating expenses for that year. When taking
the above into account, we are satisfied that the increase in operating expenses is in
line with the growth of the business.
Profit from equity accounted investments fell because certain joint ventures, as
discussed above, are now fully consolidated due to changes in effective control.
During the period, Trematon increased its investment in Stalagmite Property Investments
(Pty) Ltd ("Stalagmite") from 50% to 67%. This has resulted in Stalagmite being
consolidated into the group and in terms of IFRS 3: Business Combinations, the
investment was marked-to-market at the date of change in control. This resulted in a
fair value gain on the investment of R2.2 million.
During the period, Arbitrage, a 67% held subsidiary of Trematon concluded the transfer
of two investment properties that were classified as non-current assets held for sale at
year-end and carried at fair value. This resulted in proceeds of R146 million being
received. The proceeds were used to reduce bank debt and the balance remains available
for future property investments.
Investment properties increased due to purchases of a commercial property in Arbitrage
and residential properties in both Resi and Club Mykonos Langebaan (Pty) Ltd ("CML").
Inventories have increased by R102.2 million from year-end. This increase is mainly
due to the acquisition of properties by Resi and the consolidation of the property
held in Stalagmite. The Resi purchases were funded by bank debt and shareholder loans.
This figure represents the majority of cash utilised in operations as disclosed in the
consolidated statements of cash flow.
The Mykonos casino has continued to perform as expected and contributed R5.7 million
to equity accounted earnings for the period.
The group has cash on hand of R44.2 million which is sufficient to fund existing projects.
However, the existing deal pipeline facing the group is significant and management is
considering efficient ways to fund future growth which may include raising capital
from shareholders.
INVESTMENT REVIEW
Club Mykonos Langebaan (wholly owned) and Mykonos Casino (30% interest)
Mykonos Casino is controlled and managed by Tsogo Sun Holdings Ltd. The earnings
contribution attributable to the casino increased by 4% for the interim reporting
period. The casino is a stable and reliable generator of income and dividends for the
group but has the potential for significant further growth as a result of the increase
in popularity of the resort and the Langebaan area as a tourist destination. The
promulgation of the Saldanha Bay IDZ is also expected to catalyse economic growth in
the area of which there are already concrete examples. The casino will be refurbished
and improved during the next twelve months at a cost of approximately R30 million, which
will be funded out of cash on hand.
Club Mykonos Langebaan is the original development company for the Club Mykonos resort
and owns large tracts of zoned, serviced seafront land within the resort as well other
commercial and rental assets. The resort has undergone some significant improvements
over the past few years and the group continues to benefit. Total rental income
increased by 24% at the interim period and sales of property increased by 26%.
Occupancy levels and the number of repeat visitors continue to be very pleasing.
Detailed plans for new developments are in the late stages of completion and
announcements can be expected shortly. Total interim profits from the CML group
(including the resort and the casino) increased by 14% over the comparable interim
period.
Development opportunities at Club Mykonos include, inter alia, 500 residential
opportunities and leisure-related commercial enterprises such as hotels, commercial
buildings and yachting related facilities.
Arbitrage Property Fund - 67% interest
Arbitrage concluded two large property sales during the 2013 financial year which were
transferred during the period under review. These properties were disclosed as non-
current assets held-for-sale at year-end and were therefore carried at market value.
The current portfolio consists mainly of well located retail and industrial property
in the Western Cape and Gauteng and has low levels of gearing. All mezzanine funding
has been repaid.
Arbitrage continues to focus on value opportunities and the current deal pipeline is
promising although no material new transactions had been finalised at the time of
reporting.
Resi Investment Group - 50% interest
Resi has built further market share in the residential to-let market in the Western Cape.
The track record of delivery and competence established by the Resi team has generated
an excellent deal pipeline and this business will continue to grow at a rapid pace.
The current model of operations is to use gearing to optimise the use of our balance
sheet. A large number of purchases were made during the period, some of which are not
yet optimally tenanted and/or require refurbishment. This resulted in a high level of
initial expenses which resulted in the Resi group making a loss during the period.
As the portfolio matures we expect the investment to exceed to the 20% IRR target which
is the benchmark for the Trematon Group. The opportunity set in this market is very
large and potentially very lucrative. Therefore, management is actively investigating
alternative methods of financing growth.
OTHER
The group maintains an active trading portfolio in both listed and unlisted equities.
During the period the shares held directly in Grand Parade Investments Limited ("GPL")
were sold and a profit R5.7 million was realised. A further profit of R15 million was
realised in Cloudberry from the sale of GPL shares, which resulted in an attributable
net profit to the group of R7.4 million.
Stalagmite remains dormant while we await further news of the proposed N2 highway.
There is no gearing in this company.
The shareholding in Mazor Group Ltd, which is held indirectly in Cloudberry, which is
a BEE entity, was maintained. This investment has been a disappointing performer thus
far although the results have been improving consistently on the back of an improved
outlook for the construction sector in the Western Cape.
The pipeline of lucrative investment opportunities available to the group is currently
exceptional and is larger and more attractive than at any time since current
management took control. Although Trematon remains in a healthy financial position,
the scale of the opportunities available is in excess of our current resources and
management is therefore considering a capital raising exercise to provide the
necessary investment capital.
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 Inc.
Published date: 12 May 2014
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
Website: www.trematon.co.za
Date: 12/05/2014 03:43:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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