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Unaudited interim results for the six months ended 28 February 2018
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 2018
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
At At At
28 February 28 February 31 August
2018 2017 2017
Note R'000 R'000 R'000
ASSETS
Non-current assets 2 056 743 1 004 943 1 965 107
Property, plant and equipment 126 694 65 405 95 257
Investment properties 1 700 118 867 190 1 665 954
Investments in joint ventures 94 892 44 264 81 959
Investments in associate entities 77 553 2 287 75 853
Loans receivable 4 52 950 20 783 39 779
Goodwill 1 085 - -
Deferred tax asset 3 451 5 014 6 305
Current assets 200 549 354 834 268 517
Loans receivable 4 9 742 13 300 12 113
Trade and other receivables 14 271 9 678 24 705
Investments 9 606 10 994 9 482
Inventory 48 764 117 171 52 284
Current tax assets 2 2 2
Cash and cash equivalents 118 164 203 689 169 931
Non-current assets held for sale - - 3 587
Total assets 2 257 292 1 359 777 2 237 211
EQUITY AND LIABILITIES
Equity 977 820 699 215 954 329
Share capital and share premium 294 824 314 088 309 319
Treasury shares - (2 559) (1 108)
Fair value reserve 29 601 13 156 26 150
Share-based payments reserve 14 149 10 362 11 826
Foreign currency translation reserve (1 153) - (137)
Accumulated profit 504 406 315 708 504 254
Total equity attributable to equity holders of the parent 841 827 650 755 850 304
Non-controlling interest 135 993 48 460 104 025
Non-current liabilities 1 083 987 569 630 1 007 496
Loans payable 983 382 520 133 907 140
Deferred tax liability 100 605 49 497 100 356
Current liabilities 195 485 90 932 275 386
Loans payable 152 507 51 635 220 305
Current tax payable 161 372 831
Trade and other payables 42 817 38 925 54 250
Total equity and liabilities 2 257 292 1 359 777 2 237 211
Net asset value per share (cents) 389 299 391
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
2018 2017 2017
Note R'000 R'000 R'000
Revenue 153 989 79 840 301 203
Realised loss on held-for-trading investments (442) (4 906) (302)
Realised profit/(loss) on sale of non-current assets - 487 (282)
Realised profit on sale of associate - 91 795 91 795
Total realised (loss)/profit (442) 87 376 91 211
Fair value adjustment on held-for-trading investments 567 6 050 1 658
Fair value adjustment on investment properties 14 911 1 923 219 883
(Impairment)/reversal of impairment of loan (2 371) 2 923 1 736
Total profit from fair value adjustments 13 107 10 896 223 277
Other income - - 22 578
Employee benefits (24 237) (17 119) (40 325)
Cost of property and land sold (7 122) (2 457) (79 356)
Other operating expenses (72 418) (33 920) (90 923)
Operating profit 62 877 124 616 427 665
Finance costs (55 695) (27 351) (70 887)
Profit from equity accounted investments (net of tax) 4 19 393 8 847 47 861
Profit before income tax 26 575 106 112 404 639
Income tax (1 761) (1 631) (54 274)
Profit for the period/year 24 814 104 481 350 365
Other comprehensive income
Items that will not subsequently be reclassified to
profit/(loss):
Fair value gain on revaluation of property, plant
and equipment 4 447 989 17 734
Tax effects on fair value adjustments (996) (221) (3 972)
Items that are or may subsequently be reclassified
to profit/(loss):
Foreign currency translation differences on equity
accounted investments (1 016) - (137)
Other comprehensive income for the period/year 2 435 768 13 625
Total comprehensive income for the period/year 27 249 105 249 363 990
Profit attributable to:
Equity holders of the parent 15 496 101 053 291 777
Non-controlling interest 9 318 3 428 58 588
24 814 104 481 350 365
Total comprehensive income attributable to:
Equity holders of the parent 17 931 101 821 305 402
Non-controlling interest 9 318 3 428 58 588
27 249 105 249 363 990
Earnings per share
Number of shares issued (thousands) 216 607 217 771 217 348
Weighted average number of shares (thousands) 216 785 217 743 217 711
Diluted weighted average number of shares (thousands) 235 208 235 592 235 858
Earnings per share (cents) 7.1 46.4 134.0
Diluted earnings per share (cents) 6.6 42.9 123.1
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 2016 2 195 320 511 (2 559) 320 147 12 388
Total comprehensive income for the period - - - - 768
Profit for the period - - - - -
Fair value gain on property, plant and equipment - - - - 989
Tax effects on revaluations - - - - (221)
Share-based payment - - - - -
Ordinary shares issued - 91 - 91 -
Capital distribution - (8 709) - (8 709) -
Balance at 28 February 2017 2 195 311 893 (2 559) 311 529 13 156
Balance at 1 March 2017 2 195 311 893 (2 559) 311 529 13 156
Total comprehensive income for the period - - - - 12 994
Profit for the period - - - - -
Fair value gain on property, plant and equipment - - - - 16 745
Tax effects on revaluations - - - - (3 751)
Share-based payment - - - - -
Settlement of share-based payment - - - - -
Treasury shares cancelled (18) (4 680) 2 559 (2 139) -
Treasury shares acquired - - (1 107) (1 107) -
Foreign exchange movements on investment in associate - - - - -
Capital distribution - (71) - (71) -
Change in shareholding - - - - -
Balance at 31 August 2017 2 177 307 142 (1 107) 308 212 26 150
Balance at 1 September 2017 2 177 307 142 (1 107) 308 212 26 150
Total comprehensive income for the period - - - - 3 451
Profit for the period - - - - -
Fair value gain on property, plant and equipment - - - - 4 447
Tax effects on revaluations - - - - (996)
Share-based payment - - - - -
Treasury shares cancelled (15) (4 174) 4 189 - -
Treasury shares acquired - - (3 082) (3 082) -
Foreign exchange movements on investment in associate - - - - -
Ordinary shares issued 3 559 - 562 -
Capital distribution - (10 868) - (10 868) -
Change in shareholding - - - - -
Balance at 28 February 2018 2 165 292 659 - 294 824 29 601
Foreign
Share- currency Accumu-
based trans- lated Non-con
payment lation profit/ trolling Total
reserve reserve (loss) Total interest equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 September 2016 9 000 - 214 655 556 190 45 032 601 222
Total comprehensive income for the period - - 101 053 101 821 3 428 105 249
Profit for the period - - 101 053 101 053 3 428 104 481
Fair value gain on property, plant
and equipment - - - 989 - 989
Tax effects on revaluations - - - (221) - (221)
Share-based payment 1 362 - - 1 362 - 1 362
Ordinary shares issued - - - 91 - 91
Capital distribution - - - (8 709) - (8 709)
Balance at 28 February 2017 10 362 - 315 708 650 755 48 460 699 215
Balance at 1 March 2017 10 362 - 315 708 650 755 48 460 699 215
Total comprehensive income for the period - - 190 724 203 718 55 160 258 878
Profit for the period - - 190 724 190 724 55 160 245 884
Fair value gain on property, plant
and equipment - - - 16 745 - 16 745
Tax effects on revaluations - - - (3 751) - (3 751)
Share-based payment 1 485 - - 1 485 - 1 485
Settlement of share-based payment (21) - - (21) - (21)
Treasury shares cancelled - - - (2 139) - (2 139)
Treasury shares acquired - - - (1 107) - (1 107)
Foreign exchange movements on investment
in associate - (137) - (137) - (137)
Capital distribution - - - (71) - (71)
Change in shareholding - - (2 178) (2 178) 405 (1 773)
Balance at 31 August 2017 11 826 (137) 504 254 850 305 104 025 954 330
Balance at 1 September 2017 11 826 (137) 504 254 850 305 104 025 954 330
Total comprehensive income for the period - - 15 496 18 947 9 318 28 265
Profit for the period - - 15 496 15 496 9 318 24 814
Fair value gain on property, plant
and equipment - - - 4 447 - 4 447
Tax effects on revaluations - - - (996) - (996)
Share-based payment 2 323 - - 2 323 - 2 323
Treasury shares cancelled - - - - - -
Treasury shares acquired - - - (3 082) - (3 082)
Foreign exchange movements on investment
in associate - (1 016) - (1 016) - (1 016)
Ordinary shares issued - - - 562 - 562
Capital distribution - - - (10 868) - (10 868)
Change in shareholding - - (15 344) (15 344) 22 650 7 306
Balance at 28 February 2018 14 149 (1 153) 504 406 841 827 135 993 977 820
STATEMENT OF CASH FLOW
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2018 2017 2017
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 41 847 18 749 156 188
Finance income 6 411 4 616 10 709
Dividends received 820 - 298
Finance costs (55 695) (27 351) (70 887)
Tax paid (670) (2 677) (9 452)
Net cash from operating activities (7 287) (6 663) 86 856
Cash flows from investing activities
Acquisition of and addition to property, plant and equipment (34 801) (29 157) (44 864)
Acquisition of and addition to investment properties (19 253) (43 042) (2 512)
Proceeds on disposal of non-current assets 19 375 496 18 489
Proceeds on disposal of associate - 190 751 190 751
Loans receivable advanced - - (6 647)
Loan advanced to joint ventures and associates (4 559) (4 694) (8 089)
Loans repaid by joint ventures and associates 1 000 1 661 -
Acquisition of associate - - (72 384)
Acquisition of subsidiary (192) - -
Acquisition of held-for-trading and available-for-sale investments - (103) (120)
Proceeds from disposal of investments - 4 054 2 509
Net cash from investing activities (38 430) 119 966 77 133
Cash flows from financing activities
Ordinary shares issued 562 91 91
Acquisition of treasury shares (4 189) - (1 107)
Capital distribution (10 868) (8 709) (8 780)
Decrease in borrowings (21 706) (9 510) (54 217)
Increase in borrowings 30 150 75 954 37 396
Net cash from financing activities (6 051) 57 826 (26 617)
Net (decrease)/increase in cash and cash equivalents (51 768) 171 129 137 372
Cash and cash equivalents at the beginning of the period/year 169 932 32 560 32 560
Total cash and cash equivalents at the end of the period/year 118 164 203 689 169 932
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 28 February 2018
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.
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
28 February 28 February 31 August
2018 2018 2017 2017 2017 2017
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 15 496 101 053 291 777
Fair value adjustments on investment
properties (14 911) (8 405) (1 923) (1 958) (219 883) (119 261)
Fair value adjustments within equity
accounted profits (18 142) (9 111) (6 441) (3 332) (57 292) (36 701)
Realised profit on sale of associate - - (91 795) (91 795) (91 795) (91 795)
Realised loss on sale of property,
plant and equipment - - - - 282 219
Headline earnings (2 020) 3 968 44 239
Headline earnings per share (cents) (0.9) 1.8 20.3
Diluted headline earnings per share (cents) (0.9) 1.7 18.8
3. Segmental information
Property UK Corporate
invest- invest- and
Gaming ments Education ments other Total
R'000 R'000 R'000 R'000 R'000 R'000
Unaudited six months ended
28 February 2018
Revenue - 136 377 17 612 - - 153 989
Profit before tax - 23 999 (755) 2 511 820 26 575
Total assets - 1 937 533 114 837 74 182 130 740 2 257 292
Total liabilities - 1 270 791 8 681 - - 1 279 472
Unaudited six months ended
28 February 2017
Revenue 406 70 904 8 530 - - 79 840
Profit before tax 94 116 17 060 (1 701) - (3 363) 106 112
Total assets - 1 296 114 47 220 - 16 443 1 359 777
Total liabilities - 657 797 2 765 - - 660 562
Audited year ended
31 August 2017
Revenue 541 280 619 20 043 - - 301 203
Profit before tax 94 161 308 785 313 439 941 404 639
Total assets - 1 885 744 79 789 72 687 198 991 2 237 211
Total liabilities - 1 275 113 7 769 - - 1 282 882
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 R16.4 million and
R3.0 million respectively (2017: R6.6 million and R2.2 million respectively).
DIRECTORS' REVIEW
COMMENTARY ON FINANCIAL RESULTS
The directors consider the primary measure of value in the company to be the intrinsic net asset
value ("INAV"). Increases in INAV do not occur on a consistent annual basis and are dependent on
the value added cycle of the individual businesses. The INAV is the directors' best estimate of
the true underlying value of the company, assuming an orderly and efficient disposal process after
taking into account any possible taxes.
Towards the end of the 2017 financial year and the start of the 2018 financial year substantial
allocations of cash have been invested into new and existing businesses, notably Generation
Education ("Generation"), Aria Property Group ("Aria") (both based in the Western Cape) and
ASK Partners ("ASK") based in the UK. The 2018 financial year will be a period of consolidation,
with a focus on adding value in all businesses.
INAV per share increased to 446 cents from 431 cents at year-end. This reflects mainly realisations
of mature assets in the Resi Investment Group ("Resi") as well as trading stock in Club Mykonos
Langebaan ("CML") at values in excess of directors' valuations. There were also some revaluations
of Resi and Aria assets in nodes which have performed well.
Revenue increased by 93% to R154 million (2017: R79.8 million) due to increased rental income in Aria
and increased school fee income from the expansion of Generation. This increase is reflective of the
growth of these businesses and increases the annuity income of the group.
Net profit after tax amounted to R24.8 million (2017: R104.5 million). In the prior interim period,
material realisations in the investment portfolio were made which resulted in a high level of profits
for that period, most notably the sale of Trematon's interest in the Mykonos Casino for a profit of
R91.8 million. On a like-for-like basis excluding once-off capital profits, group earnings have
increased on the prior year by 95%. 2017 profit excluding the Mykonos Casino sale was R12.7 million.
Earnings per share decreased to 7.1 cents (2017: 46.4 cents). Earnings per share in 2017, excluding
profit from the Mykonos Casino sale, was 4.3 cents. A headline loss per share of 0.9 cent
(2017: profit of 1.8 cents) was realised. The decrease in headline earnings is mainly due to expenses
related to the take-on and refurbishment of new properties which were vacant during the period as well
as increased school costs in preparation for the expansion of our current schools.
REVIEW OF MAJOR INVESTMENTS
Generation Education
Generation currently has six school sites of which four are operating schools with two sites
currently under development. The number of students has increased to 833 (August 2017: 500 students).
The two largest schools are in Sunningdale and Hermanus. The Sunningdale campus is complete and at
full capacity with a substantial waiting list. The Hermanus campus is still under construction and
operating at current capacity. When complete the Hermanus school will be able to accommodate
350 students.
Generation is also developing ancillary businesses in high growth areas of the education market.
Aria Property Group
Aria focused on the management and leasing of its existing commercial portfolio during the period by
concentrating on new and existing tenants as well as driving collection and cost-saving
efficiencies within the underlying portfolio.
Pier Place, in the Cape Town CBD, achieved practical completion within budget and ahead of time
and has established itself as a landmark offering within a precinct which is undergoing strong
growth and redevelopment. Management has shifted their focus to unlocking value and exploring upgrades
to Maynard Mall which will bring about much welcomed change to this Community Shopping Centre in
Wynberg, Western Cape.
Aria continues to phase in various other value adding redevelopment opportunities in its portfolio.
Club Mykonos Langebaan
CML generates annuity income from the rental of commercial properties to restaurant operators, boat
and general storage facilities, the marina and other resort commercial activities. CML owns all
the undeveloped land within the Club Mykonos Resort, which will be developed over the next few years.
The latest phase released for sale is Marina Edge which consists of 16 developed plots on the
edge of the marina. Nine plots have been sold to date.
CML has proven to be a resilient investment and has performed well during the period despite
general weakness in the hospitality industry in Cape Town.
Resi Investment Group
Resi's portfolio comprises over 600 residential units in the Western Cape. It provides stable
rental returns for the group and continues to provide good capital growth in a strong
Western Cape market.
Resi continues to seek completed units to purchase but the current focus is on the development of
residential apartments in the greater Cape Town area. Development plans are under way and further
developments are likely to commence in the next six to 12 months.
ASK Partners
ASK is a UK-based structured finance company that aims to provide innovative financing to property
developers in the UK. This is the first interim period in which ASK is included in the group results.
ASK contributed R2.5 million to the group results before a write-down of R1 million due to the
appreciation of the Rand relative to the Pound. ASK performed ahead of its original budget
within its first year of operation and is on track to achieve good returns in Pound Sterling.
CONCLUSION
All five business silos have focused and competent management and each has the potential to achieve
the group's target IRR of 20% per annum.
The share price is trading at a significant discount to INAV. This is not under the direct control
of management and reflects the same pattern as other investment holding companies in the current
market. The focus of the management team is to grow the INAV over time. Should the discount persist,
share buy-backs and other ways of reducing the discount will be considered.
INTRINSIC VALUE REPORT
Trematon is an investment holding company and uses the intrinsic value model to provide management
and investors with a realistic and transparent way of evaluating Trematon's performance and value.
The intrinsic net asset value report below illustrates the intrinsic net asset value of all
investment categories of the group for the period ended 28 February 2018. The preparation of the
intrinsic net asset value is the responsibility of the directors of Trematon. The intrinsic net
asset value has been prepared to assist investors in analysing future prospects of the group.
The financial information below has been compiled by using a combination of listed market values,
external professional valuations, or directors' valuations, where applicable.
Intrinsic value
February February August
2018 2017 2017
R'000 R'000 R'000
Club Mykonos Langebaan 1 149 052 176 283 132 836
Aria Property Group 1 218 819 121 335 226 860
Resi Investment Group 1 251 328 187 928 211 440
Generation Education 2 128 382 54 993 94 626
ASK Partners 3 74 182 - 72 687
Other 4 25 995 41 039 29 060
Cash 118 164 203 689 169 931
Totals 965 922 785 267 937 440
Number of shares in issue (thousands) 216 607 217 771 217 348
INAV per share (cents) 446 361 431
Notes
1 The assets have been valued by using a combination of directors' valuation and/or external
professional valuers, where applicable.
2 The school operations have been valued using discounted cash flows. The school properties are
carried at market value using directors' valuations.
3 The investment is carried at cost and adjusted for exchange rate fluctuations.
4 "Other" includes listed shares, held directly and indirectly, and other minor assets less
related debt.
Domicile and registered office: 3rd floor, Aria North Wharf
42 Hans Strijdom Avenue, Foreshore, Cape Town, 8001
PO Box 7677, Roggebaai, 8012, South Africa
Contact details: Tel: 021 421 5550
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 member of the Sasfin Group
Auditor: Mazars
Published date: 23 April 2018
Prepared by: The group financial results have been prepared under the supervision
of the chief financial officer, Mr AL Winkler CA (SA).
Website: www.trematon.co.za
Date: 23/04/2018 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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