Wrap Text
Unaudited Interim Results for the six months ended 29 February 2016
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" or "the group")
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 29 FEBRUARY 2016
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
At At At
29 February 28 February 31 August
2016 2015 2015
Note R'000 R'000 R'000
ASSETS
Non-current assets 953 650 505 916 880 311
Property, plant and equipment 19 458 7 876 7 317
Investment properties 777 041 380 014 725 570
Investments in joint ventures 30 152 12 157 28 033
Investments in associate entities 102 530 89 501 96 692
Loans receivable 4 20 473 11 124 20 572
Deferred tax asset 3 996 5 244 2 127
Current assets 150 828 266 320 194 723
Loans receivable 4 6 450 6 824 8 521
Trade and other receivables 15 525 5 386 9 164
Investments 18 428 13 057 39 373
Inventories 88 442 88 353 82 274
Current tax assets 47 2 2
Cash and cash equivalents 21 936 152 698 55 389
Non-current assets held for sale - 8 350 -
Total assets 1 104 478 780 586 1 075 034
EQUITY AND LIABILITIES
Equity 563 580 454 645 542 528
Share capital and share premium 321 237 328 669 329 076
Treasury shares (2 559) (2 559) (2 559)
Fair value reserve 11 063 1 683 11 322
Share-based payments reserve 7 976 5 359 6 657
Accumulated profit 184 414 85 143 165 151
Total equity attributable to equity
holders of the parent 522 131 418 295 509 647
Non-controlling interest 41 449 36 350 32 881
Non-current liabilities 496 682 270 553 478 236
Loans payable 455 385 253 392 454 245
Deferred tax liability 41 297 17 161 23 991
Current liabilities 44 216 55 388 54 270
Loans payable 14 261 13 756 24 968
Current tax payable 11 148 111
Trade and other payables 29 944 41 484 29 191
Total equity and liabilities 1 104 478 780 586 1 075 034
Net asset value per share (cents) 241 193 235
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2016 2015 2015
R'000 R'000 R'000
Revenue 63 381 59 485 103 117
Realised profit on held-for-trading investments 1 797 71 5 848
Realised profit on sale of non-current assets 60 - 128
Total realised profit 1 857 71 5 976
Fair value adjustment on held-for-trading
investments (5 458) (1 109) 417
Fair value adjustment on investment properties 41 990 6 581 77 110
Deemed profit on the transfer of inventory to
investment properties - 17 389 17 389
Impairment of loan (2 181) (6 093) (4 535)
Total profit from fair value adjustments 34 351 16 768 90 381
Employee benefits (12 305) (7 977) (15 619)
Cost of property and land sold (7 090) (22 799) (35 742)
Other operating expenses (24 221) (16 776) (33 919)
Operating profit 55 973 28 772 114 194
Finance costs (21 489) (11 740) (26 792)
Profit from equity accounted investments
(net of tax) 7 957 5 947 31 216
Profit before income tax 42 441 22 979 118 618
Income tax (14 671) (2 419) (10 580)
Profit for the period/year 27 770 20 560 108 038
Other comprehensive income
Items that will not subsequently be reclassified
to profit/(loss):
Fair value gain on revaluation of property,
plant and equipment 409 - 11 779
Tax effects on fair value adjustments (92) - (2 140)
Change in tax rate effects on revaluations (576) - -
Other comprehensive income for the period/year (259) - 9 639
Total comprehensive income for the period/year 27 511 20 560 117 677
Profit attributable to:
Equity holders of the parent 19 202 11 613 95 235
Non-controlling interest 8 568 8 947 12 803
27 770 20 560 108 038
Total comprehensive income attributable to:
Equity holders of the parent 18 943 11 613 104 874
Non-controlling interest 8 568 8 947 12 803
27 511 20 560 117 677
Earnings per share
Number of shares issued (thousands) 216 754 216 323 216 577
Weighted average number of shares (thousands) 216 581 176 765 196 787
Diluted weighted average number of shares
(thousands) 234 753 191 871 213 488
Earnings per share (cents) 8.9 6.6 48.4
Diluted earnings per share (cents) 8.2 6.1 44.6
Headline earnings per share (cents) (note 2) (2.3) 4.0 11.2
Diluted headline earnings per share (cents) (note 2) (2.3) 3.7 10.3
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 2014 1 781 207 478 (2 559) 206 700 1 683
Total comprehensive income for
the period - - - - -
Profit for the period - - - - -
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
Balance at 1 March 2015 2 181 326 488 (2 559) 326 110 1 683
Total comprehensive income for
the period - - - - 9 639
Profit for the period - - - - -
Fair value gain on property, plant
and equipment - - - - 11 779
Tax effects on revaluations - - - - (2 140)
Ordinary shares issued 3 404 - 407 -
Share-based payment - - - - -
Settlement of share-based payment - - - - -
Change in shareholding - - - - -
Balance at 31 August 2015 2 184 326 892 (2 559) 326 517 11 322
Balance at 1 September 2015 2 184 326 892 (2 559) 326 517 11 322
Total comprehensive income for
the period - - - - (259)
Profit for the period - - - - -
Fair value gain on property, plant
and equipment - - - - 409
Tax effects on revaluations - - - - (92)
Change in tax rate effects on
revaluations - - - - (576)
Share-based payment - - - - -
Settlement of share-based payment - - - - -
Ordinary shares issued 1 281 - 282 -
Capital distribution - (8 121) - (8 121) -
Balance at 29 February 2016 2 185 319 052 (2 559) 318 678 11 063
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 2014 4 188 82 346 294 917 27 403 322 320
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
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
Balance at 1 March 2015 5 359 85 143 418 295 36 350 454 645
Total comprehensive income for
the period - 83 622 93 261 3 855 97 116
Profit for the period - 83 622 83 622 3 855 87 477
Fair value gain on property, plant
and equipment - - 11 779 - 11 779
Tax effects on revaluations - - (2 140) - (2 140)
Ordinary shares issued - - 407 - 407
Share-based payment 1 386 - 1 386 - 1 386
Settlement of share-based payment (88) 88 - - -
Change in shareholding - (3 702) (3 702) (7 324) (11 026)
Balance at 31 August 2015 6 657 165 151 509 647 32 881 542 528
Balance at 1 September 2015 6 657 165 151 509 647 32 881 542 528
Total comprehensive income for
the period - 19 202 18 943 8 568 27 511
Profit for the period - 19 202 19 202 8 568 27 770
Fair value gain on property, plant
and equipment - - 409 - 409
Tax effects on revaluations - - (92) - (92)
Change in tax rate effects on
revaluations - - (576) - (576)
Share-based payment 1 380 - 1 380 - 1 380
Settlement of share-based payment (61) 61 - - -
Ordinary shares issued - - 282 - 282
Capital distribution - - (8 121) - (8 121)
Balance at 29 February 2016 7 976 184 414 522 131 41 449 563 580
STATEMENTS OF CASH FLOW
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2016 2015 2015
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 8 568 54 302 36 461
Finance income 1 892 2 160 4 760
Dividends received 360 150 257
Dividends received from associate - 7 410 7 409
Finance costs (21 489) (11 740) (26 792)
Dividend paid - (8 816) (8 816)
Tax (paid)/received (137) 205 16
Net cash from operating activities (10 806) 43 671 13 295
Cash flows from investing activities
Acquisition of and addition to property,
plant and equipment (17 603) (284) (6 269)
Acquisition of and addition to investment
properties (6 528) (74 752) (319 485)
Proceeds on disposal of non-current assets 212 - 12 127
Business combination - - 44
Loans receivable advanced (110) - (6 039)
Loan advanced to joint ventures and associates (1 062) (6 364) (9 053)
Loans repaid by joint ventures and associates 1 950 - 4 786
Acquisition of held-for-trading and available-
for-sale investments (9 378) (3 501) (44 663)
Proceeds from disposal of investments 27 278 1 051 12 397
Net cash from investing activities (5 241) (83 850) (356 155)
Cash flows from financing activities
Ordinary shares issued 282 119 410 119 817
Capital distribution (8 121) - -
Decrease in borrowings (10 232) (17 688) (13 736)
Increase in borrowings 665 46 655 247 668
Net cash from financing activities (17 406) 148 377 353 749
Net (decrease)/increase in cash and
cash equivalents (33 453) 108 198 10 889
Cash and cash equivalents at the beginning
of the period/year 55 389 44 500 44 500
Total cash and cash equivalents at the end
of the period/year 21 936 152 698 55 389
NOTES
1. Presentation of consolidated results
Trematon Capital Investments Limited (the "company") is a company domiciled in
South Africa. The unaudited interim consolidated results of the company for the
period ended 29 February 2016 comprise the company and its subsidiaries
(together referred to as the "group") and the group's interest in joint ventures
and associates.
The unaudited interim consolidated results have been prepared in accordance with
and containing information required by IAS 34 - Interim Financial Reporting, the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and in the manner required by the Companies Act and the JSE Limited Listings
Requirements. The unaudited interim consolidated results have been prepared using
accounting policies and methods of computation that are in terms of IFRS and which
are consistent with those of the previous annual financial statements. The unaudited
interim consolidated results have not been audited or reviewed by the company's
auditors.
The unaudited interim consolidated results have been prepared on the going concern
basis using a combination of the historical cost and fair value bases of accounting.
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 unaudited interim consolidated results are stated in Rands, which is the
group's functional and presentation currency.
In preparing the unaudited interim consolidated results management is required to
make estimates and assumptions that affect the amounts represented in the unaudited
interim consolidated results 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 unaudited interim consolidated results.
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.
2. Headline earnings per share reconciliation
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2016 2016 2015 2015 2015 2015
Gross Net* Gross Net Gross Net
R'000 R'000 R'000 R'000 R'000 R'000
Profit attributable to
equity holders of
the parent 19 202 11 613 95 235
Fair value adjustment on
investment properties (41 990) (25 283) (6 581) (3 568) (77 110) (59 813)
Fair value adjustments
within equity accounted
profits (7 380) (3 818) (1 916) (1 039) (25 967) (15 822)
Goodwill write-off - - - - 2 595 2 595
Change in tax rate on
previous fair value
adjustments on
investment property - 3 898 - - - -
Change in tax rate on
previous fair value
adjustments within
equity accounted profits - 1 008 - - - -
Realised profit on sale of
property, plant and
equipment (60) (43) - - (128) (104)
Headline earnings (5 036) 7 005 22 091
Headline earnings per share
(cents) (2.3) 4.0 11.2
Diluted headline earnings
per share (cents) (2.3) 3.7 10.3
* Net headline earnings is net of tax and non-contolling interest.
3. Segmental information
Property
invest- Educa- Unallo-
Gaming ments tion cated Total
R'000 R'000 R'000 R'000 R'000
Unaudited six months ended
29 February 2016
Revenue 954 60 138 2 289 - 63 381
Profit before tax 6 796 39 399 (779) (2 975) 42 441
Total assets 105 505 968 027 19 542 11 404 1 104 478
Total liabilities - 540 162 736 - 540 898
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 94 213 679 167 - 7 206 780 586
Total liabilities - 325 941 - - 325 941
Audited year ended
31 August 2015
Revenue 1 613 101 504 - - 103 117
Profit before tax 20 347 99 541 - (1 270) 118 618
Total assets 100 625 960 965 - 13 444 1 075 034
Total liabilities - 532 506 - - 532 506
4. Loans receivable
Loans receivable include loans due from related parties including joint ventures,
associates and other investments which are not consolidated in the group.
Profit from these equity accounted joint ventures and associates amounted to
R2 million and R6 million respectively.
DIRECTORS' REVIEW
Introduction
The group continues to broaden its investment base and has achieved positive results
in most areas of operation.
Financial review
Earnings per share increased by 35% to 8.9 cents per share when compared to the prior
interim period. Headline earnings decreased to a loss of 2.3 cents per share.
The difference between headline earnings and earnings per share is due to fair value
adjustments on investment properties being excluded from headline earnings. During
this interim period various investment properties purchased in the last 12 months have
been improved and long high-quality leases signed which have resulted in the fair
value adjustment.
Net asset value increased by 25% to 241 cents per share from 193 cents in the prior
interim period. The intrinsic net asset value increased by 13% over the prior interim
period to 367 cents per share (2015: 326 cents). The intrinsic net asset value is the
best indicator as to the market value of the group's assets and investments.
Cash on hand at the end of the period was R21.9 million which is a decrease from the
R55.4 million at 31 August 2015. The cash was used to purchase additional investment
properties within Resi Investment Group and Aria Property Group and for the
construction of the Marina Village development at Club Mykonos Langebaan. Most recently
it was utilised for the investment in Generation Education, including the construction
of its first school in Sunningdale, Cape Town.
Investment review
Club Mykonos Langebaan ("CML") (100% interest) and Mykonos Casino (30% interest)
The biggest new investment at CML is the construction of 25 luxury units on the
waterfront. "Marina Village" is expected to be completed by the end of 2016. 60% of
the Marina Village units have been sold. This development will introduce a new category
of leisure accommodation in the area and is part of the ongoing improvement and
renovation at the resort.
Other resort properties are also being improved and most commercial tenants are trading
well. The occupancies and average room rate at the resort have shown excellent growth over
the past 12 months - the group is not a major direct beneficiary of this trend as it does not
own many units but this growth enhances the value of the remaining development
opportunities.
As a reflection of these trends CML was recognised again at the RCI Osca awards as one
of the top five large resorts in South Africa.
The South African casino industry has seen subdued growth over the past 24 months,
however Mykonos Casino has been one of the best-performing casino operations in the
country over this period and has shown consistent growth in gaming revenue and profit.
This is due to the improvements at the resort and some positive regional factors.
Aria Property Group ("Aria") (67% interest)
During the period, Aria completed the redevelopment of Northgate Office Park (a joint venture
between the group and Buffet Investments). Lease commitments have been received for the
entire building and management is very satisfied with the quality of the tenant profile.
The core portfolio showed solid growth in both rentals and values and vacancies remained
immaterial.
Aria entered into an agreement to purchase a well located industrial property in Parow,
Western Cape for R19 millon. This property was transferred after the interim period.
The portfolio is in a growth phase and management is hopeful that further acquisition
opportunities will arise during 2016.
Resi Investment Group ("Resi") (100% interest)
This was a period of consolidation for Resi with a focus on further improving the quality
of the rental book and operational efficiency. Further small acquisitions were made in
apartment blocks and suburbs where Resi already has an investment presence. There were
also some small realisations in the trading portfolio.
The fundamental economic case for rental stock of the type that Resi owns remains strong
but the availability of completed units at attractive prices has reduced so the group has
partnered with other investors on a joint venture basis for the construction of a 126-unit
development in Sanddrift, Cape Town (between Century City and Milnerton) - the projected
initial yield on the development is more than 10% and further opportunities are being explored.
Generation Education (75% interest)
Generation Education's first school was constructed in Sunningdale in the Western Cape at a
cost of R18 million. It is a state-of-the-art school which offers a high standard of
education to children aged six months to 12 years. Initial demand has exceeded expectations
and plans are under way to increase the capacity of the school.
Initial indications are that the model employed by Generation Education is viable and the
group is currently focusing on expanding its offering and is in the process of looking at
various school sites and projects to expand this business.
This business has been in operation for two months and has contributed R2.3 million to
revenue to date. The business as a whole contributed a net loss of R0.8 million for the
period being mainly due to set-up and administration costs.
Other
Other investments include an indirect investment in Mazor Group, Stalagmite Property Investments
(an industrial park in Somerset West) and various listed and unlisted investments. There was
no material change in this part of the portfolio and each investment is continuously assessed.
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 the required IFRS
interpretations, which in some cases do not allow for certain investments to be shown
at their market values, such as investments in associates and joint ventures, which
are recorded at cost plus its share of post-acquisition reserves less distributions
received and inventory which is carried at the lower of cost and net realisable value.
The intrinsic net asset value of the group includes valuations of all investment
categories and represents, in the opinion of the directors, a more accurate assessment
of the group's value than the net asset value calculated in terms of IFRS.
These valuations are either based on their listed market value, external professional
or directors' valuations.
29 February 2016 28 February 2015 31 August 2015
Book Intrinsic Book Intrinsic Book Intrinsic
value value value value value value
Note R'000 R'000 R'000 R'000 R'000 R'000
Listed shares 1 18 428 18 428 13 057 13 057 39 373 39 373
Club Mykonos Langebaan 2 207 419 442 271 175 124 398 111 190 549 430 774
Property, Marina and Casino
Aria Property Group 3 428 017 428 879 110 084 110 084 392 940 392 940
Commercial property
Resi Investment Group 3 340 484 372 609 278 479 362 145 340 194 367 987
Residential property
Generation Education 4 18 806 18 806 - - - -
Schools and education
Cash on hand 5 21 936 21 936 152 698 152 698 55 389 55 389
Other assets 5 69 388 69 388 33 982 33 982 56 590 56 590
Total assets 1 104 478 1 372 317 763 424 1 070 077 1 075 035 1 343 053
Liabilities 6 540 898 534 398 308 779 322 266 532 506 526 006
Non-controlling interests 6 41 449 41 449 36 350 36 350 32 881 32 881
Net assets (attributable to
equity holders) 522 131 796 470 418 295 711 461 509 648 784 166
Intrinsic net asset value
per share (cents) 241 367 193 326 235 362
Note:
1. Valuation based on quoted market prices at year-end.
2. Valuation of assets at Club Mykonos based on current market prices of similar assets
and earnings, where applicable.
3. Directors' valuation taking into account current market prices.
4. Valuation based on cost of assets.
5. Market value equals book value as well as directors' valuations, where applicable.
6. Liabilities include total borrowings of group and subsidiary companies.
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, 2001
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: 18 April 2016
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: 18/04/2016 11:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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