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Unaudited Interim Results for the six months ended 28 February 2015
TREMATON CAPITAL INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/008691/06)
JSE code: TMT
ISIN: ZAE000013991
("Trematon" or "the company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2015
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
28 February 28 February 31 August
2015 2014 2014
Note R'000 R'000 R'000
ASSETS
Non-current assets 505 916 271 779 330 348
Property, plant and equipment 7 876 8 583 8 191
Investment properties 380 014 136 867 210 410
Investments - 14 879 -
Investments in joint ventures 12 157 12 949 10 015
Investments in associate entities 89 501 92 300 91 330
Loans receivable 11 124 - 6 110
Deferred tax asset 5 244 6 201 4 292
Current assets 266 320 266 253 275 240
Loans receivable 6 824 24 342 12 918
Trade and other receivables 5 386 18 214 23 108
Investments 13 057 11 799 12 070
Inventories 88 353 167 554 182 385
Current tax assets 2 155 259
Cash and cash equivalents 152 698 44 189 44 500
Non-current assets held for sale 2 8 350 - -
Total assets 780 586 538 032 605 588
EQUITY AND LIABILITIES
Equity 454 645 288 626 322 320
Share capital and share premium 328 669 209 259 209 259
Treasury shares (2 559) (2 559) (2 559)
Fair value reserve 1 683 9 730 1 683
Share-based payments reserve 5 359 3 232 4 188
Accumulated profit 85 143 50 602 82 346
Total equity attributable to equity holders of
the parent 418 295 270 264 294 917
Non-controlling interest 36 350 18 362 27 403
Non-current liabilities 270 553 204 175 241 196
Loans payable 253 392 188 126 227 216
Deferred tax liability 17 161 16 049 13 980
Current liabilities 55 388 45 231 42 072
Loans payable 13 756 8 687 10 965
Current tax payable 148 7 430 10
Trade and other payables 41 484 29 114 31 097
Total equity and liabilities 780 586 538 032 605 588
Net asset value per share (cents) 193 153 167
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
2015 2014 2014
R'000 R'000 R'000
Revenue 59 485 31 037 67 773
Realised profit on available-for-sale investments - 3 657 13 902
Realised profit on held-for-trading investments 71 816 1 351
Realised profit on sale of property, plant
and equipment - - 12
Realised profit on sale of non-current assets - 11 -
Gain on change in shareholding - 1 034 1 034
Total realised profit 71 5 518 16 299
Fair value adjustment on held-for-trading
investments (1 109) (4 332) (1 285)
Fair value adjustment on investment properties 6 581 - 33 040
Deemed profit on the transfer of inventory to
investment property 17 389 - -
Fair value adjustment on previously held
investment in joint venture - 2 229 2 229
(Impairment)/reversal of impairment of loan (6 093) 6 756 4 593
Total profit from fair value adjustments 16 768 4 653 38 577
Employee benefits (7 977) (6 922) (12 853)
Cost of property and land sold (22 799) (6 639) (16 173)
Other operating expenses (16 776) (16 324) (31 718)
Operating profit 28 772 11 323 61 905
Finance costs (11 740) (7 296) (17 845)
Profit from equity accounted investments
(net of tax) 5 947 5 565 13 217
Profit before income tax 22 979 9 592 57 277
Income tax (2 419) (2 014) (8 915)
Profit for the period/year 20 560 7 578 48 362
Other comprehensive income
Items that will subsequently be reclassified
to profit/(loss)
Fair value gain on available-for-sale investments - 3 995 4 347
Reclassification adjustment on sale of available-
for-sale investments - (3 657) (13 902)
Tax effects on revaluations - (63) 1 784
Other comprehensive income for the period/year - 275 (7 771)
Total comprehensive income for the period/year 20 560 7 853 40 591
Profit attributable to:
Equity holders of the parent 11 613 11 504 43 247
Non-controlling interest 8 947 (3 926) 5 115
20 560 7 578 48 362
Total comprehensive income attributable to:
Equity holders of the parent 11 613 11 779 35 476
Non-controlling interest 8 947 (3 926) 5 115
20 560 7 853 40 591
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 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
Balance at 1 March 2014 1 781 207 478 (2 559) 206 700 9 730
Total comprehensive income for
the period - - - - (8 047)
Profit for the period - - - - -
Fair value gain on available-
for-sale investments - - - - 352
Reclassification adjustment on sale of
available-for-sale investments - - - - (10 245)
Tax effects on revaluations - - - - 1 846
Share purchases - - - - -
Share-based payment - - - - -
Balance at 31 August 2014 1 781 207 478 (2 559) 206 700 1 683
Balance at 1 September 2014 1 781 207 478 (2 559) 206 700 9 730
Total comprehensive income for
the period - - - - -
Profit for the period - - - - -
Fair value gain on available-
for-sale investments - - - - -
Tax effects on revaluations - - - - -
Share-based payment - - - - -
Ordinary shares issued 400 119 010 - 119 410 -
Dividends paid - - - - -
Balance at 28 February 2015 2 181 326 488 (2 559) 326 110 1 683
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 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
Balance at 1 March 2014 3 232 50 602 270 264 18 362 288 626
Total comprehensive income for
the period - 31 744 23 697 9 041 32 738
Profit for the period - 31 744 31 744 9 041 40 785
Fair value gain on available-
for-sale investments - - 352 - 352
Reclassification adjustment on sale of
available-for-sale investments - - (10 245) - (10 245)
Tax effects on revaluations - - 1 846 - 1 846
Share purchases - - - - -
Share-based payment 956 - 956 - 956
Balance at 31 August 2014 4 188 82 346 294 917 27 403 322 320
Balance at 1 September 2014 3 232 50 602 270 264 18 362 288 626
Total comprehensive income for
the period - 11 613 11 613 8 947 20 560
Profit for the period - 11 613 11 613 8 947 20 560
Fair value gain on available-
for-sale investments - - - - -
Tax effects on revaluations - - - - -
Share-based payment 1 171 - 1 171 - 1 171
Ordinary shares issued - - 119 410 - 119 410
Dividends paid - (8 816) (8 816) - (8 816)
Balance at 28 February 2015 5 359 85 143 418 295 36 350 454 645
STATEMENTS OF CASH FLOW
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2015 2014 2014
Cash flows from operating activities
Cash generated from/(utilised in) operations 54 302 (107 207) (121 913)
Finance income 2 160 1 400 4 070
Dividends received 150 1 771 1 855
Dividends received from associate 7 410 - 5 927
Finance costs (11 740) (7 296) (17 845)
Dividend paid (8 816) (5 731) (5 731)
Tax received/(paid) 205 (486) (9 996)
Net cash from operating activities 43 671 (117 549) (143 633)
Cash flows from investing activities
Acquisition of property, plant and equipment (284) (582) (809)
Acquisition of and addition to
investment property (74 752) (27 470) (67 510)
Proceeds from disposal of investment properties - 146 403 146 403
Proceeds on disposal of non-current assets - 60 83
Business combination - (61) (61)
Loans receivable repaid - - 9 261
Loans receivable advanced - - (6 110)
Loan advanced to joint ventures and associates (6 346) (3 133) (1 466)
Loans repaid by joint ventures - - 3 672
Acquisition of held-for-trading and available-
for-sale investments (3 501) (15 492) (20 917)
Proceeds from disposal of investments 1 501 11 253 33 459
Net cash from investing activities (83 850) 110 978 96 005
Cash flows from financing activities
Ordinary shares issued 119 410 - -
Decrease in borrowings (17 688) - (72 647)
Increase in borrowings 46 655 16 080 130 095
Net cash from financing activities 148 377 16 080 57 448
Net increase in cash and cash equivalents 108 198 9 509 9 820
Cash and cash equivalents at the beginning
of the period/year 44 500 34 680 34 680
Total cash and cash equivalents at the end
of the period/year 152 698 44 189 44 500
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 2015 comprise the company and its subsidiaries (together
referred to as the 'group') and the group's interest in joint ventures and associates.
The interim financial statements have been prepared in accordance with and containing
the information required by IAS 34 Interim Financial Reporting as well as the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee, the
Listings Requirements of the JSE Limited and the Companies Act of South Africa. 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 bases of accounting.
All significant accounting policies have been consistently applied to all periods
presented and throughout the group.
Other standards or interpretations that have been issued and are effective, have
been adopted by the group but are not applicable to its activities.
The consolidated interim financial statements are stated in Rands, which is the
group'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.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2015 2014 2014
2 Non-current assets held for sale
Investment property 8 350 - -
The company entered into agreements to dispose
of one investment property. The investment
property, in terms of IFRS,is carried at fair
value reclassified to non-current assets held
for sale.
3 Earnings per share
Number of shares issued (thousands) 216 323 176 323 176 323
Weighted average number of shares (thousands) 176 765 176 323 176 323
Diluted weighted average number of shares
(thousands) 191 871 190 073 190 137
Earnings per share (cents) 6.6 6.5 24.5
Diluted earnings per share (cents) 6.1 6.1 22.7
4 Headline earnings per share reconciliation
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2015 2014 2014
R'000 R'000 R'000 R'000 R'000 R'000
Gross Net Gross Net Gross Net
Profit attributable to equity
holders of the parent 11 613 11 504 43 247
Gain on acquisition of subsidiary - - (1 034) (1 034) (1 034) (1 034)
Fair value adjustment on deemed
disposal of investment in joint
venture - - (2 229) (2 229) (2 229) (2 229)
Fair value adjustment on
investment properties (6 581) (3 568) - - (33 040) (18 159)
Realised profit on available-
for-sale investments - - (3 657) (2 974) (13 902) (11 307)
Fair value adjustments within
equity accounted profits (1 916) (1 039) (1 317) (948) (3 490) (2 838)
Realised profit on sale of
property, plant and equipment - - - - (12) (10)
Headline earnings 7 005 4 319 7 670
Headline earnings per share
(cents) 4.0 2.5 4.3
Diluted headline earnings per
share (cents) 3.7 2.3 4.1
5 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 2015
Revenue 930 58 555 - - 59 485
Profit before tax 13 394 16 190 (6 605) - 22 979
Total assets 94 213 526 469 159 904 - 780 586
Total liabilities - 325 941 - - 325 941
Unaudited six months ended
28 February 2014
Revenue 1 336 29 701 - - 31 037
Profit before tax 7 057 (705) 3 240 - 9 592
Total assets 107 179 394 712 36 141 - 538 032
Total liabilities - 249 406 - - 249 406
Audited year ended
31 August 2014
Revenue 2 257 64 501 1 015 - 67 773
Profit before tax 19 887 32 740 4 650 - 57 277
Total assets 95 130 489 270 21 188 - 605 588
Total liabilities - 283 268 - - 283 268
DIRECTORS' REVIEW
INTRODUCTION
The 1st of April 2015 represented the ten year anniversary of the company under the
current senior management team. Ten years ago Trematon had a single listed investment
and negligible cash reserves. Today Trematon is a diversified investment holding
company with its current focus on commercial and residential property, leisure and
gaming activities and related investments.
In February 2015 the company concluded its first capital raising exercise by issuing
shares to select institutional investors and individuals. The primary purpose of the
capital raising was to take advantage of Trematon's growing investment pipeline and
ensure that the balance sheet could sustain the growth of the company. A secondary
aim of the issue of shares was to broaden the shareholder base of the company and
increase the marketability of the company's shares in order to provide shareholders
with a more liquid investment.
FINANCIAL REVIEW
The intrinsic net asset value of the company has increased 19% to 326 cents from
274 cents per share since the last interim period, the details of which are set out
in this interim report. The intrinsic net asset value represents the market value of
listed investments and the directors' best estimate of the market value of all
non-listed investment assets at the end of the period after deducting liabilities.
Interim earnings per share increased by 1.5% to 6.6 cents (2014: 6.5 cents) and
headline earnings increased by 60% to 4.0 cents (2014: 2.5 cents) when compared to
the prior interim period.
At the end of the period cash on hand in the Trematon Group amounted to R152.7 million
(2014: R44.2 million) which is sufficient to fund the company's anticipated investment
pipeline for the next 12 months.
During the period under review, the company changed its intention with regards to
various residential properties held as trading stock. These properties are fully let
and are now held as long-term investments. This movement is reflected in the decrease
in trading stock and increase in investment properties in the statement of financial
position. The resulting movement in the fair value of the properties on reclassification
is disclosed in the statement of profit or loss as a deemed profit of R17.4 million.
The loan impairment of R6.0 million refers to a market value adjustment in the group's
indirect investment in Mazor Group Limited.
Revenue increased by 91.7% to R59.5 million (2014: R31.0 million) as a result of
increased rental income and sales of inventory in the Resi Investment Group ("Resi").
Share capital and cash have increased due to the capital raising exercise mentioned above.
INVESTMENT REVIEW
CLUB MYKONOS LANGEBAAN ("CML") (WHOLLY OWNED) AND MYKONOS CASINO (30% INTEREST)
Mykonos Casino is controlled and managed by Tsogo Sun Holdings Limited. The casino has
benefited from the improvement at the resort and the growth in the Langebaan/Saldanha
area over the past few months. The casino's contribution to earnings increased by 7%
to R5.9 million (2014: R5.5 million) for the interim reporting period. Dividends of
R7.4 million were received from the casino during the period. The refurbishment of the
casino announced last year is underway. This will be funded out of the casino's cash
reserves and is expected to be complete by July 2015. Despite the disruption caused by
the refurbishment the casino continues to trade well and is expected to provide a
growing income stream as the regional economy improves and matures.
Club Mykonos Langebaan is a very popular holiday resort destination situated 90 minutes
from Cape Town. The improvements at the resort have been recognised by the leisure
industry - most recently the resort General Manager, Jon Kilroe-Smith received an award
from RCI for the best General Manager of a large resort in South Africa which is well
deserved recognition for several years of constant improvement and attention to the
holiday experience of customers.
The "Boatyard at Mykonos" development which commenced in 2011 is nearing completion and
is a popular and viable storage and boat service facility which complements the well
established Club Mykonos Marina. The entire development comprises 236 garages, a
warehouse and related commercial activities.
The first major residential development at Club Mykonos for several years has commenced.
"Marina Village" is situated on the water's edge adjacent to the yacht moorings and
will consist of 25 luxury waterfront simplex and duplex units. The development is
expected to be complete by the third quarter of 2016.
The conferencing and restaurant operations, all of which are outsourced to on-site
operators, are showing good growth, which is reflected in steadily increasing rental
income. One new beachfront restaurant (Marc's Beach Bar) commenced trading shortly
after the end of this reporting period and is expected to be a popular addition to
the service offering.
ARIA PROPERTY FUND (67% INTEREST, PREVIOUSLY ARBITRAGE PROPERTY FUND) ("ARIA")
Aria has a growing reputation in the midsize commercial property industry in South Africa
and has been a regular material contributor to the earnings of the group.
Aria's most recent acquisitions were announced on SENS on 31 March 2015 and comprise a
portfolio of properties with a cost of R203 million. The properties are geographically
diverse commercial properties and were purchased from the Redefine Group. The above
acquisitions together with Northgate Office Park and North Wharf will increase the cost
of the portfolio by R307.4 million. Transfer of these properties is expected to be
complete by the end of this financial year.
The Northgate Office Park redevelopment is nearing completion and is expected to be
completed and fully occupied by the end of the financial year. The building is located
on the N1 highway in Cape Town close to the Koeberg interchange.
Aria has a track record of adding significant value to mid-sized properties with
focused and creative management.
RESI INVESTMENT GROUP (50% INTEREST)
Resi has continued to make acquisitions in the Western Cape and the portfolio has
shown excellent growth in both rental income and the capital value of assets. The
residential property market in the Western Cape has been very strong in this segment.
The amount of stock available at suitable prices has reduced so the rate of acquisition
of new assets has slowed down but the group remains committed to this investment area
and the portfolio will continue to grow. In view of the transfer of certain assets from
inventory to long-term investments, the amount of residential property trading conducted
by the group may decline over time.
OTHER
The group maintains an active equity trading portfolio which did not have a material
effect on earnings or net asset value during the period. Trading and investing in
listed and unlisted equities remains a core activity of the group.
Trematon is investigating several new investment opportunities and will keep
shareholders informed of progress in this regard.
INTRINSIC VALUE REPORT
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 or like assets
- Earnings yields and the underlying growth potential
28 February 2015 28 February 2014 31 August 2014
Book Intrinsic Book Intrinsic Book Intrinsic
value value value value value value
R'000 R'000 R'000 R'000 R'000 R'000 Note
Listed shares 13 057 13 057 26 678 26 678 12 070 12 070 1
Cloudberry Investments 18 6 825 6 825 24 342 24 342 12 918 12 918 2
Stalagmite Property Investments 8 816 8 816 3 263 8 800 8 816 8 816 3
Club Mykonos Langebaan 175 124 398 111 161 591 301 319 162 674 374 407 4
Property, Marina and Casino
Aria Property Fund (previously
Arbitrage Property Fund) 110 084 110 084 100 562 100 562 111 462 111 462 3
Commercial property
Resi Investment Group 278 479 362 145 146 513 213 300 202 148 254 276 3
Residential property
Cash on hand 152 698 152 698 44 189 44 189 44 500 44 500 5
Other assets 18 340 18 340 30 894 30 894 51 000 51 000 5
Total assets 763 424 1 070 076 538 032 750 084 605 588 869 449
Liabilities 308 779 322 266 249 406 249 406 283 268 283 268 5
Non-controlling interests 36 350 36 350 18 362 18 362 27 402 30 802 5
Net assets (attributable to
equity holders) 418 294 711 460 270 264 482 316 294 917 555 379
Intrinsic net asset value
per share (cents) 192 326 153 274 167 315
Note:
1 Valuation based on listed market prices at period/year-end.
2 Valuation based on net asset value of company using quoted market prices at period/year-end.
3 Directors' valuation taking into account current market prices.
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.
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: SA Litten
Sponsor: Sasfin Capital, a division of Sasfin Bank Limited
Auditor: Mazars
Published date: 20 April 2015
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: 20/04/2015 01:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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