Wrap Text
Preliminary results for the year ended 31 August 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")
PRELIMINARY CONDENSED CONSOLIDATED RESULTS
FOR THE YEAR ENDED 31 AUGUST 2016
CONDENSED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 August 31 August
2016 2015
Notes R'000 R'000
ASSETS
Non-current assets 1 024 092 880 312
Property, plant and equipment 37 359 7 317
Investment properties 822 225 725 570
Investments in joint ventures 37 617 28 034
Investments in associate entities 99 043 96 692
Loans receivable 22 903 20 572
Deferred tax asset 4 945 2 127
Current assets 166 572 194 722
Loans receivable 10 377 8 521
Investments 13 905 39 373
Inventories 101 213 82 274
Current tax asset 2 2
Trade and other receivables 8 515 9 164
Cash and cash equivalents 32 560 55 388
Total assets 1 190 664 1 075 034
EQUITY AND LIABILITIES
Equity 601 222 542 528
Share capital and share premium 322 706 329 076
Treasury shares 2 (2 559) (2 559)
Fair value reserve 12 389 11 322
Share-based payment reserve 8 999 6 657
Accumulated profit 214 655 165 151
Total equity attributable to equity holders of the parent 556 190 509 647
Non-controlling interest 45 032 32 881
Liabilities
Non-current liabilities 492 753 478 236
Loans payable 444 179 454 245
Deferred tax liability 48 574 23 991
Current liabilities 96 689 54 270
Loans payable 61 145 24 968
Current tax liabilities 1 916 111
Trade and other payables 33 628 29 191
Total liabilities 589 442 532 506
Total equity and liabilities 1 190 664 1 075 034
Net asset value per share (based on shares in
issue at year-end) (cents) 255 235
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
Year ended Year ended
31 August 31 August
2016 2015
R'000 R'000
Revenue 132 644 103 116
Realised profit on held-for-trading investments 3 331 5 847
Realised profit on sale of non-current assets 60 128
Total realised profit 3 391 5 975
Fair value adjustment on held-for-trading investments (8 690) 417
Fair value adjustment on investment properties 68 330 77 110
Deemed profit on transfer of inventory to investment property - 17 389
Reversal of impairment/(impairment) of loan 1 462 (4 535)
Total profit from fair value adjustments 61 102 90 381
Employee benefits (23 476) (15 618)
Cost of property and land sold (10 062) (35 742)
Other operating expenses (52 854) (33 918)
Operating profit 110 745 114 194
Finance costs (47 580) (26 792)
Profit from equity accounted investment (net of tax) 20 825 31 216
Profit before income tax 83 990 118 618
Income tax (22 335) (10 580)
Profit for the year 61 655 108 038
Other comprehensive income
Items that will not subsequently be reclassified to profit/(loss):
Fair value gain on revaluation of property, plant and equipment 1 942 11 779
Tax effects of fair value adjustments (876) (2 140)
Other comprehensive income for the year 1 066 9 639
Total comprehensive income for the year 62 721 117 677
Profit attributable to:
Equity holders of the parent 49 504 95 235
Non-controlling interests 12 151 12 802
61 655 108 037
Total comprehensive income attributable to:
Equity holders of the parent 50 570 104 875
Non-controlling interests 12 151 12 802
62 721 117 677
Basic earnings per share 22.8 cents 48.4 cents
Diluted earnings per share 21.1 cents 44.6 cents
CONDENSED STATEMENT OF CHANGES IN EQUITY
Share-
Total based
Share Share share Treasury payment
capital premium capital shares reserve
R'000 R'000 R'000 R'000 R'000
Balance at 1 September 2014 1 781 207 478 209 259 (2 559) 4 188
Total comprehensive income for the year - - - - -
Profit for the year - - - - -
Fair value gain on revaluation of
property, plant and equipment - - - - -
Tax effects on revaluations - - - - -
Share-based payment expense - - - - 2 557
Settlement of share-based payment - - - - (88)
Ordinary shares issued 403 119 414 119 817 - -
Dividends paid (Note 6) - - - - -
Change in shareholding - - - - -
Balance at 31 August 2015 2 184 326 892 329 076 (2 559) 6 657
Balance at 1 September 2015 2 184 326 892 329 076 (2 559) 6 657
Total comprehensive income for the year - - - - -
Profit for the year - - - - -
Fair value gain on revaluation of
property, plant and equipment - - - - -
Tax effects on revaluations - - - - -
Share-based payment expense - - - - 2 737
Settlement of share-based payment - - - - (395)
Ordinary shares issued 11 1 807 1 818 - -
Capital distribution - (8 188) (8 188) - -
Balance at 31 August 2016 2 195 320 511 322 706 (2 559) 8 999
Note 2
Accumu-
Fair lated Non-con-
value profit/ trolling Total
reserve (loss) Total interest equity
R'000 R'000 R'000 R'000 R'000
Balance at 1 September 2014 1 683 82 346 294 917 27 403 322 320
Total comprehensive income for the year 9 639 95 235 104 874 12 802 117 676
Profit for the year - 95 235 95 235 12 802 108 037
Fair value gain on revaluation of
property, plant and equipment 11 779 - 11 779 - 11 779
Tax effects on revaluations (2 140) - (2 140) - (2 140)
Share-based payment expense - - 2 557 - 2 557
Settlement of share-based payment - 88 - - -
Ordinary shares issued - 119 817 - 119 817
Dividends paid (Note 6) - (8 816) (8 816) - (8 816)
Change in shareholding - (3 702) (3 702) (7 324) (11 026)
Balance at 31 August 2015 11 322 165 151 509 647 32 881 542 528
Balance at 1 September 2015 11 322 165 151 509 647 32 881 542 528
Total comprehensive income for the year 1 067 49 504 50 571 12 151 62 722
Profit for the year - 49 504 49 504 12 151 61 655
Fair value gain on revaluation of
property, plant and equipment 1 943 - 1 943 - 1 943
Tax effects on revaluations (876) - (876) - (876)
Share-based payment expense - - 2 737 2 737
Settlement of share-based payment - - (395) - (395)
Ordinary shares issued - - 1 818 - 1 818
Capital distribution - - (8 188) - (8 188)
Balance at 31 August 2016 12 389 214 655 556 190 45 032 601 222
CONDENSED STATEMENT OF CASH FLOWS
Reviewed Audited
Year ended Year ended
31 August 31 August
2016 2015
R'000 R'000
Cash flows from operating activities
Cash generated from operations 26 930 36 461
Finance income 2 041 4 760
Dividends received 435 257
Dividends received from associate 8 891 7 409
Finance costs (47 580) (26 792)
Dividends paid - (8 816)
Taxation (paid)/received (36) 16
Net cash (outflow)/inflow from operating activities (9 319) 13 295
Cash flows from investing activities
Acquisition of property, plant and equipment (19 948) (6 269)
Acquisition of and addition to investment properties (32 439) (319 485)
Proceeds on disposal of non-current assets 212 12 127
Loans receivable advanced (537) (6 039)
Business combination - 44
Loans advanced to joint ventures and associates (647) (9 053)
Loans repaid by joint ventures and associates - 4 786
Acquisition of held-for-trading and available-for-sale
investments (12 638) (44 663)
Proceeds on disposal of investments 32 747 12 397
Net cash outflow from investing activities (33 250) (356 155)
Cash flows from financing activities
Issue of shares 1 818 119 817
Capital distribution (8 188) -
Decrease in borrowings (11 467) (13 736)
Increase in borrowings 37 577 247 668
Net cash inflow from financing activities 19 740 353 749
Net (decrease)/increase in cash and cash equivalents (22 829) 10 889
Cash and cash equivalents at the beginning of the year 55 389 44 500
Total cash and cash equivalents at the end of the year 32 560 55 389
NOTES
1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS
Trematon Capital Investments Limited (the "company") is a company domiciled in
South Africa. The consolidated financial statements of the company as at and for the
year ended 31 August 2016 comprise the company and its subsidiaries (together
referred to as the "group") and the group's interest in associates and joint ventures.
The financial statements were authorised for issue by the directors on 4 November 2016.
The preliminary, condensed consolidated results (the "results") have been prepared
in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS") and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and
contain the information required by IAS 34: Interim Financial Reporting, the JSE
Listings Requirements and the Companies Act. The accounting policies and methods of
computation applied in the presentation of the results are consistent with those
applied in the prior year. These accounting policies and methods of computation
are in terms of IFRS.
The results are stated in Rands, which is the company's functional and presentation
currency.
There have been no changes to the board of directors during the year under review.
The results have been reviewed by the company's independent auditors, Mazars.
Their unmodified review opinion is available for inspection at the company's registered
office. Their review was conducted in accordance with ISRE 2410 "Review of interim
financial information performed by the independent auditor of the entity".
The auditors' report does not necessarily report on all of the information contained
in these results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors' engagement they should obtain a copy
of the auditors' report together with the accompanying financial information from
the company's registered office.
2. TREASURY SHARES
Reviewed Audited
Year ended Year ended
31 August 31 August
2016 2015
Number of shares held at year-end 1 772 771 1 772 771
3. RELATED PARTY TRANSACTIONS R'000 R'000
Profits from equity accounted joint ventures 9 583 18 444
Profit from equity accounted associate 11 242 12 772
Interest received from associates 101 -
Interest received from joint ventures 1 440 1 240
Dividend received from associate 8 891 7 409
Administration fees received from associate 1 652 137
Administration fees received from joint ventures 132 287
Directors' emoluments 10 266 8 866
4. HEADLINE EARNINGS PER SHARE
Reviewed Audited
Year ended Year ended
31 August 31 August
2016 2015
R'000 R'000 R'000 R'000
Gross Net Gross Net
Headline earnings per share is calculated
as follows:
Profit attributable to equity holders of
the parent 49 504 95 235
Fair value adjustment on investment
properties (68 330) (37 285) (77 110) (59 813)
Fair value adjustments within equity
accounted profits (14 707) (8 522) (25 967) (15 822)
Goodwill write-off - - 2 595 2 595
Realised profit on sale of property,
plant and equipment (60) (46) (128) (104)
Headline earnings 3 651 22 091
Headline earnings per share (cents) 1.7 11.2
Diluted headline earnings per share (cents) 1.6 10.3
The calculation of headline earnings per share is based on the weighted average
number of 216 964 383 shares in issue during the year (2015: 196 787 425).
The calculation of diluted headline earnings per share is based on the diluted
weighted average number of 234 753 255 shares in issue during the year
(2015: 213 488 389).
5. SEGMENTAL INFORMATION
Property
invest- Unallo- Elimin-
Gaming ments Education cated ations Total
R'000 R'000 R'000 R'000 R'000 R'000
2016
Revenue 1 580 123 697 7 367 - - 132 644
Intersegment revenue 8 891 - - - (8 891) -
Net income before tax 22 290 60 061 245 1 394 - 83 990
Total assets 97 041 1 042 637 23 970 27 016 - 1 190 664
Total liabilities - 588 810 632 - - 589 442
2015
Revenue 1 612 101 504 - - - 103 116
Intersegment revenue 7 409 - - - (7 409) -
Net income 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
The education segment is a new segment presented in the current year upon the segment
becoming fully operational.
6. Subsequent events
Subsequent to year-end Trematon, via its subsidiary, Aria Property Group, entered
into agreements to purchase R614.1 million worth of properties from Redefine Properties
Limited. The majority of the purchase price will be funded by bank borrowings. Further
information can be found in the SENS announcement released on 31 October 2016.
Subsequent to year-end Trematon entered into a 50:50 joint arrangement to purchase
R83 million worth of residential property units in Sanddrift, Cape Town. The majority
of the purchase price will be funded by bank borrowings.
7. CAPITAL REDUCTION DISTRIBUTION
The capital distribution of R8.2 million (3.75 cents per share) which was declared
on 7 November 2015 was paid to members on 18 January 2016.
The capital distribution was treated as a return of contributed tax capital to
shareholders recorded in the share register of the company at the close of business
on 15 January 2016.
On 4 November 2016, subsequent to year-end, the board of directors declared a
capital reduction distribution of 4.0 cents per share as a return of contributed
tax capital to shareholders recorded in the share register of the company at the
close of business on Friday, 27 January 2016.
The directors have determined that this capital reduction distribution will be paid
out of qualifying contributed tax capital, as contemplated in the definition of
"contributed tax capital" in section 1 of the Income Tax Act, 1962. As the
distribution will be regarded as a return of capital and may have potential capital
gains tax consequences, Trematon shareholders are advised to consult their tax
advisers regarding the impact of the distribution.
The directors have reasonably concluded that the company will satisfy the solvency
and liquidity test immediately after the capital distribution.
The net amount payable to shareholders is R8.8 million, being 4.0 cents per share,
based on the current number of 219 486 600 shares in issue.
The income tax reference number of Trematon Capital Investments Limited is 9340/323/84/0.
Last date to trade: Tuesday, 24 January 2017
Ex-date: Wednesday, 25 January 2017
Record date: Friday, 27 January 2017
Payment date: Monday, 30 January 2017
Share certificates may not be dematerialised or rematerialised between Wednesday,
25 January 2017 and Friday, 27 January 2017, both days inclusive.
8. ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting ("AGM") of the members of
Trematon Capital Investments Limited will be held in the boardroom on the third floor,
Aria North Wharf, 42 Hans Strijdom Avenue, Cape Town on Wednesday, 25 January 2017
at 10:00.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S JOINT REPORT
Trematon is an investment holding company that invests in assets and operating
businesses which management believes will have the potential to generate an internal
rate of return of 20% or greater over time. The company's operations are not limited
to a specific commercial area but there is currently a strong focus on property-related
investments.
The group owns some operating businesses with a stable income flow but these tend to
be outweighed by investment activities during the year. The pattern of investment
acquisition and realisation is irregular which can result in uneven profits that do
not follow predictable patterns. In order to ameliorate this volatility it is our
objective to pay a regular and growing dividend over time.
Intrinsic net asset value increased slightly in the current year to 368 cents per share
reflecting a stable but relatively subdued year for property and investment assets in
general. Some major investment projects were close to completion in the current year
but will only be concluded and fully accounted for in the next financial year. There
were no major changes to the composition of the group's net asset value during the
financial year.
Group revenues increased by 29%. The bulk of revenue is made up of rental income which
increased by 81% during the period but this was partially off-set by a decline in
sales of property. Group profit after tax declined by 42% because the prior period
contained several once-off profits which were not repeated and diluted earnings per
share declined by 53%. The group dividend was increased by 7% to 4 cents per share.
The annuity income of the group is growing, which is reflected by the increase in
rental income and the addition of school fee income which is expected to provide the
group with a more stable base of earnings in the future. As noted above, profits are
somewhat volatile but the group aims to pay a steadily growing dividend which is
supported by long-term income growth. For a detailed review of the financial aspects
of the results please refer to the Chief Financial Officer's report below.
Management undertook a strategic review process during the financial year and certain
material changes will be implemented in the group structure over the next 12 to
18 months. It was felt that Club Mykonos was a very large proportion of the group's
net asset value and that, although it is a stable and attractive asset, it should
make up a smaller proportion of the total net asset value. This can be achieved by
liquidating a portion of that investment or by growing the balance of the portfolio,
or a combination of both. A further outcome of the strategic review process was to
continue to focus on value added property opportunities via the Aria Property Group
and on education via Generation Education. It was also recognised that the group
could improve its communications with its broad shareholder base and steps have been
put in place to achieve this.
Shareholders should note that a SENS announcement relating to an acquisition of
properties by Aria Property Group, was made on 31 October 2016 which related to the
preceding paragraph. The full impact of this announcement will be felt over the next
12 to 24 months.
The group has four major areas of operation: Club Mykonos (including a 30% share in
the Mykonos Casino), Aria Property Group (commercial, retail and industrial property
investments), Resi Investment Group (residential property investments primarily held
for rental) and Generation Education (a new education paradigm incorporating a
Montessori framework in the early years and internationally based Cambridge Education
for older students). The group also has an active trading portfolio which includes
listed and unlisted equities across many industry sectors.
CLUB MYKONOS LANGEBAAN (PTY) LIMITED
Mykonos Casino
In the period under review the Mykonos Casino contributed R10.8 million to group
profits which was 3.3% lower than the previous period. Extensive roadworks on the main
access roads in and around Langebaan had a material impact on trading but growth
should resume once this has been completed.
The Marina and Boatyard
The Club Mykonos Marina (188 berths and related commercial activities) remains in high
demand and continues to generate sustainable profit growth.
The development of the boatyard (251 boat and general storage garages of various
sizes) is now complete. Occupancy is currently running at around 90% and it should
have a similar profit profile to the marina once optimised.
COMMERCIAL AND LEISURE PROPERTIES
The Club Mykonos resort continues to improve as a holiday destination. Club Mykonos
also has a growing residential component of permanent occupants who are attracted by
the beautiful surroundings, security and amenities.
The resort Homeowners Association is in a sound financial position and strives to
maintain the resort infrastructure at a high level.
The Marina Village development is nearing completion and the first transfers will take
place in early 2017. A few units were held back until completion and these will be
actively marketed over the holiday season.
Several significant development opportunities still exist on the resort and these are
being actively explored for when Marina Village is complete.
Restaurants and other commercial operators on the resort have shown good turnover
growth and rentals are generally growing at inflation or faster.
ARIA PROPERTY GROUP ("ARIA")
Aria is a commercial property business with a focus on property investments which are
institutional quality prime assets. The geographic focus is predominantly on the
Western Cape although there are some opportunistic investments in other areas. Aria
has established a sound and growing reputation for adding value to commercially
viable investments. The primary focus is on establishing solid rental income for
these properties. Properties are purchased with a long-term view but the portfolio
is reviewed regularly and some assets may be sold if management feels there is
limited opportunity to add further value.
At year-end Aria owned property assets amounting to R466.7 million. Subsequent to
year-end a further R614.1 million worth of properties were purchased from the
Redefine group which includes Pier Place (in the Cape Town Foreshore), the Maynard Mall
(a regional shopping centre in Wynberg, Cape Town) and Berg River Park (an industrial
park in Paarl, Western Cape). Total property assets after this acquisition will
amount to R1.081 billion.
After the completion of the new purchases 90% of the portfolio will be in the
Western Cape. The acquisition will provide Aria with a balanced mix of income-
producing assets with positive income growth potential and the opportunity to add
value through ad hoc redevelopment projects and active hands-on asset management.
RESI INVESTMENT GROUP ("RESI")
Resi's core portfolio has performed well due to a combination of focused management
and a generally strong market for rental properties in the Western Cape. In certain
areas, where management feels that the opportunity for further capital appreciation
is limited, selective sales will take place in 2017.
Incremental investment took place in existing complexes but there were no opportunities
for major purchases at attractive prices due to the generally strong market and a
shortage of supply.
As a result of the lack of existing stock, management has begun to enter into
development projects in the new financial year. The group undertook a 50:50 joint
venture project to purchase 126 units in Sanddrift (situated between Century City
and Milnerton). Transfer took place shortly after the financial year-end and the
letting-up process has progressed well. The development is currently 70% let and
should be fully let by December 2016. The projected yields on this investment promise
to be better than those on existing buildings for sale and further projects will be
selectively pursued.
The Woodstock Hub joint venture is still active and further accumulation of stock
continues to take place. Prices in the area have increased but management has
identified strategic locations which will be acquired if they are commercially viable.
GENERATION EDUCATION
Generation Education is a grouping of schools with a modern approach to education
that uses Montessori principles in the early years and an internationally accredited
curriculum provided by Cambridge University in the higher grades.
Our first school (Generation Sunningdale) was built at the end of 2015 and opened its
doors in the current financial year. The demand for places at the school has exceeded
expectations and the school is currently undergoing a major expansion. Although the
schools are priced to be affordable, the model has proved to be commercially viable
and we will continue to invest in the business.
Agreements were entered into for the purchase of a school in Hermanus that will be
rebranded and run by Generation Education. Plans are being prepared to expand the
school by adding more classrooms and additional facilities.
A site in Noordhoek was also acquired which is suitable for a large school, the
process of applying for rezoning has commenced and we are hopeful that a positive
announcement can be made in this regard during 2017. Subsequent to year-end a suitably
zoned building in Melkbos was acquired.
CONCLUSION
The 2016 financial year was a year of consolidation and introspection for the group.
A major strategy discussion took place early in the year and the implementation of
that strategy began in earnest towards the end of the financial year, with most of the
significant transformative transactions taking place after year-end. Therefore, the
financial picture to be presented at the interim stage in February 2017 will differ
very substantially from that presented in these accounts.
Notably, the Aria portfolio will have more than doubled in size, exceeding R1 billion
of high-quality institutional grade assets which provide a significant pipeline for
valued added repurposing or redevelopment.
Generation Education, although small as a proportion of the current net asset value,
has excellent growth potential and the group now owns four school sites with further
sites under active investigation.
All four major areas of operation (Aria, Resi, Club Mykonos and Generation Education)
have made significant new investments and have good momentum for the forthcoming
financial year.
CHIEF FINANCIAL OFFICER'S REPORT
OVERVIEW
Trematon has continued to grow its capital base and add value to its various
investments while continuing to investigate new opportunities. The earnings and
headline earnings have decreased on the prior-year results, while the net asset value
and intrinsic net asset value have increased marginally.
RESULTS
The group made a profit for the year attributable to equity holders of R49.5 million
(2015: R95.2 million). This translates to earnings per share of 22.8 cents
(2015: 48.4 cents) which is a decrease of 53% over the prior year. The reason for the
decrease in earnings is due to the inclusion in the prior year of non-recurring items,
primarily the reclassification of inventory to investment property in the prior year
in terms of IFRS. There were also fair value adjustments on held-for-trading investments
that were written down in the current year. Expenses were incurred during the current
year on the expansion of Generation Education and various other investments.
The group's book net asset value has increased by 20 cents per share to 255 cents per
share (2015: 235 cents per share) which is an increase of 9% over the prior year.
The intrinsic net asset value has increased by 6 cents per share to 368 cents per
share (2015: 362 cents per share). This is an increase of 2% from the prior year's
intrinsic net asset value. The intrinsic net asset value aims to provide shareholders
with a realistic estimate of the group's net asset value. This differs from the IFRS
values where IFRS requires that certain assets are not recorded at their market value.
INDIVIDUAL INVESTMENTS
Subsidiaries
Club Mykonos Langebaan ("CML") (100%)
CML contributed a profit for the year of R20.5 million (2015: R28.0 million). This profit
includes a contribution from the Mykonos Casino of R10.8 million (2015: R11.2 million).
Dividends from the casino for the year amounted to R8.9 million (2015: R7.4 million).
The casino traded well through the year, however profits were flat when compared to the
prior year. The refurbishment carried out in the prior year and completed at the
beginning of the current year did have a slight impact in the gross gaming revenue,
however the upgrade of the main access road into Langebaan has proven to have a
slight negative impact on the current year's results as access has been affected.
Rental income from investment properties has continued to meet expectations.
Sales of Marina Village units, the newest development on the water's edge at the
Mykonos Marina has proven to meet our expectations with 16 of the 25 units already
sold. Completion and transfer is expected in early 2017.
Resi Investment Group (100%)
Resi's core focus continues to be the investment in residential properties with
long-term rental income profiles. While there has been a slowdown in residential
property acquisitions, we have entered into a joint venture partnership that purchased
126 newly developed residential property units in Sanddrift, Cape Town. These were
completed and transferred at the end of October 2016. These developments are expected
to be both yield enhancing and add capital growth to the portfolio in the long term.
Resi contributed R12.8 million (2015: R61.1 million) to group profits. The main reason
for the large decrease in earnings is due to fair value adjustments being recognised
in the prior year in respect of inventory that was reclassified to investment property.
Even though the residential market may be slowing down we are always investigating
opportunities to grow this business and make acquisitions that meet our investment
criteria.
Aria Property Group (67%)
Aria, which includes Arbitrage Property Fund (Pty) Limited, invests in properties in
the commercial, industrial and retail sectors. Aria contributed R38.4 million
(2015: R26.3 million) to group profit. Aria continues its intention of growing its
asset base with good-quality property investments that generate both high yields and
long-term capital growth.
Subsequent to year-end Aria entered into agreements with Redefine Properties Limited
for the purchase of R614.1 million worth of properties - see SENS announcement on
31 October 2016 for further details. This will increase Aria's investment properties
to over R1 billion.
Generation Education ("Generation") (75%)
Generation's first school was opened in Sunningdale in the Western Cape in January 2016.
The investment has proven to be a success with the school reaching capacity from day
one, with a large waiting list for future students. The current school offers classes
up to age 12 and we are in the process of expanding the school to include a middle
school which will cater for children aged 12 to 15. The construction of the middle
school is currently under way and is expected to be completed by the middle of 2017.
The company contributed R0.3 million to group profits. A majority of the current year's
expenses is due to the initial group setup costs as well as absorbing costs that
related to future school expansions.
Generation has concluded the purchase of an existing school in Hermanus and the
purchase of a large plot of land in Noordhoek (both located in the Western Cape).
The Hermanus school will be operated as a Generation school from 1 January 2017 and
will be extended from its current form to provide classes up to age 15. The Noordhoek
land will be utilised to build a new school catering for children from ages 3 to 18 years.
Joint Ventures and associates
The Vredenburg Property Trust ("VPT") (50%)
VPT, a joint venture of which Aria owns 50%, owns the Vredenburg Mall in Vredenburg,
Western Cape. VPT contributed R2.0 million (2015: R2.7 million) to equity accounted
earnings. Operating profits reduced marginally over the prior year, however the asset
continues to perform as expected.
Tremtrust 1 (50%)
Tremtrust owns the Northgate Park which is an A-Grade office park located on the
N1 highway in Cape Town. This is a joint venture with Buffet Investment Services (Pty)
Limited. The refurbishment and redevelopment of the property has proven to be a
success and is now fully tenanted. Tremtrust contributed R2.4 million to equity
accounted profits (2015: R12.2 million). The decrease in profits is mainly due to
larger fair value adjustments being accounted for in the prior financial year.
The fair market value of the property is R195.6 million.
The Woodstock Hub (Pty) Limited (50%)
The Woodstock Hub has continued its acquisition of properties in the Woodstock area
in Cape Town with the intention to redevelop both residential, commercial and mixed-use
properties. The Woodstock Hub has contributed R5.2 million to equity accounted profits
during the year (2015: R4.7 million).
Buffshelf 70 Trust (20%)
Buffshelf owns the Cape Gate Value Centre situated in Brackenfell, Cape Town.
The investment is equity accounted and contributed R0.4 million to group profits
(2015: R1.6 million).
OTHER INVESTMENTS
Trematon continues to invest in various JSE-listed companies where we feel a trading
opportunity exists. During the current year Trematon realised a profit on held-for-
trading investments of R3.3 million (2015: R5.8 million).
The group maintains its investment in Cloudberry Investments 18 (Pty) Limited which
holds shares in Mazor Group Limited. This investment improved slightly in the current
year due to the increase in the Mazor share price. The investment in Cloudberry
continues to be carried at its realisable value, which is estimated with reference
to the market value of the underlying listed investments held by Cloudberry.
Domicile and registered office: 42 Hans Strijdom Avenue, Cape Town
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
Date published: 14 November 2016
Prepared by: The group financial results have been prepared under the supervision
of Mr AL Winkler Chief Financial Officer CA (SA).
Contact details: Tel: 021 421 5550, Fax: 021 421 5551
Website: www.trematon.co.za
The preliminary condensed consolidated results have been independently reviewed in
compliance with the requirements of the Companies Act of South Africa.
Date: 14/11/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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