Wrap Text
Consolidated Results for the year ended 31 August 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")
PRELIMINARY CONDENSED CONSOLIDATED RESULTS
for the year ended 31 August 2018
CONDENSED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
At At
31 August 31 August
2018 2017
Note R'000 R'000
ASSETS
Non-current assets 2 094 953 1 965 107
Property, plant and equipment 150 490 95 257
Investment properties 1 702 317 1 665 954
Investments in joint ventures 94 848 81 959
Investments in associate entities 88 473 75 853
Loans receivable 55 412 39 779
Deferred tax asset 3 413 6 305
Current assets 200 403 268 516
Loans receivable 20 575 12 113
Investments 10 603 9 481
Inventories 50 777 52 284
Current tax asset - 2
Trade and other receivables 19 406 24 705
Cash and cash equivalents 99 042 169 931
Non-current assets held for sale 2 354 3 588
Total assets 2 297 710 2 237 211
EQUITY AND LIABILITIES
Equity 1 023 459 954 329
Share capital and share premium 293 497 309 319
Treasury shares 2 (137) (1 107)
Fair value reserve 31 073 26 150
Foreign currency translation reserve 3 733 (137)
Share-based payment reserve 15 681 11 826
Accumulated profit 536 210 504 254
Total equity attributable to equity holders of the parent 880 057 850 305
Non-controlling interest 143 402 104 024
Non-current liabilities 1 196 477 1 007 495
Loans payable 1 096 960 907 140
Deferred tax liability 99 517 100 355
Current liabilities 77 774 275 387
Loans payable 15 075 220 306
Current tax liabilities 62 831
Trade and other payables 62 637 54 250
Total liabilities 1 274 251 1 282 882
Total equity and liabilities 2 297 710 2 237 211
Net asset value per share (based on shares in issue at year-end) (cents) 407 391
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
Year ended Year ended
31 August 31 August
2018 2017
R'000 R'000
Revenue 317 576 301 203
Realised loss on held-for-trading investments (854) (302)
Realised profit/(loss) on sale of non-current assets 2 187 (282)
Realised profit on sale of associate - 91 795
Total realised profit 1 333 91 211
Fair value adjustment on held-for-trading investments 3 713 1 658
Fair value adjustment on investment properties 32 768 219 883
(Impairment)/reversal of impairment of loan (2 666) 1 737
Total profit from fair value adjustments 33 815 223 278
Other income 1 097 22 578
Employee benefits (51 833) (40 325)
Cost of property and land sold (11 169) (79 356)
Other operating expenses (154 515) (90 923)
Operating profit 136 304 427 666
Finance costs (110 544) (70 887)
Profit from equity accounted investments (net of tax) 25 383 47 860
Profit before income tax 51 143 404 639
Income tax (792) (54 274)
Profit for the year 50 351 350 365
Other comprehensive income
Items that will not subsequently be reclassified to profit/(loss):
Fair value gain on revaluation of property, plant and equipment 6 344 17 734
Tax effects of fair value adjustments (1 421) (3 972)
Items that are or may subsequently be reclassified to profit/(loss):
Foreign currency translation differences on equity accounted investments 3 870 (137)
Other comprehensive income for the year 8 793 13 625
Total comprehensive income for the year 59 144 363 990
Profit attributable to:
Equity holders of the parent 35 657 291 777
Non-controlling interest 14 694 58 588
50 351 350 365
Total comprehensive income attributable to:
Equity holders of the parent 44 450 305 402
Non-controlling interest 14 694 58 588
59 144 363 990
Basic earnings per share (cents) 16.5 134.0
Diluted earnings per share (cents) 15.1 123.1
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 2016 2 195 320 511 322 706 (2 559) 8 999
Total comprehensive income for year - - - - -
Profit for the year - - - - -
Fair value gain on revaluation of
property, plant and equipment - - - - -
Tax effects on revaluations - - - - -
Share-based payment expense - - - - 2 847
Settlement of share-based payment - - - - (20)
Treasury shares cancelled (17) (4 680) (4 697) 2 559 -
Treasury shares acquired - - - (1 107) -
Foreign currency translation reserve - - - - -
Ordinary shares issued 1 91 92 - -
Capital distribution - (8 782) (8 782) - -
Change in shareholding - - - - -
Balance at 31 August 2017 2 179 307 140 309 319 (1 107) 11 826
Balance at 1 September 2017 2 179 307 140 309 319 (1 107) 11 826
Total comprehensive income for year - - - - -
Profit for the year - - - - -
Fair value gain on revaluation of
property, plant and equipment - - - - -
Tax effects on revaluations - - - - -
Share-based payment expense - - - - 3 977
Settlement of share-based payment - - - - (122)
Treasury shares cancelled (19) (5 499) (5 518) 5 518 -
Treasury shares acquired - - - (4 548) -
Foreign currency translation reserve - - - - -
Ordinary shares issued 4 559 563 - -
Capital distribution - (10 867) (10 867) - -
Change in shareholding - - - - -
Balance at 31 August 2018 2 164 291 333 293 497 (137) 15 681
Note 2
Foreign
currency Non-
translation Fair value Accumulated controlling Total
reserve reserve profit/(loss) Total interest equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 September 2016 - 12 389 214 655 556 190 45 032 601 222
Total comprehensive income for year - 13 761 291 777 305 538 58 588 364 126
Profit for the year - - 291 777 291 777 58 588 350 365
Fair value gain on revaluation of
property, plant and equipment - 17 733 - 17 733 - 17 733
Tax effects on revaluations - (3 972) - (3 972) - (3 972)
Share-based payment expense - - - 2 847 - 2 847
Settlement of share-based payment - - - (20) - (20)
Treasury shares cancelled - - - (2 138) - (2 138)
Treasury shares acquired - - - (1 107) - (1 107)
Foreign currency translation reserve (137) - - (137) - (137)
Ordinary shares issued - - - 92 - 92
Capital distribution - - - (8 782) - (8 782)
Change in shareholding - - (2 178) (2 178) 404 (1 774)
Balance at 31 August 2017 (137) 26 150 504 254 850 305 104 024 954 329
Balance at 1 September 2017 (137) 26 150 504 254 850 305 104 024 954 329
Total comprehensive income for year - 4 923 35 657 40 580 14 694 55 274
Profit for the year - - 35 657 35 657 14 694 50 351
Fair value gain on revaluation of
property, plant and equipment - 6 344 - 6 344 - 6 344
Tax effects on revaluations - (1 421) - (1 421) - (1 421)
Share-based payment expense - - - 3 977 - 3 977
Settlement of share-based payment - - - (122) - (122)
Treasury shares cancelled - - - - - -
Treasury shares acquired - - - (4 548) - (4 548)
Foreign currency translation reserve 3 870 - - 3 870 - 3 870
Ordinary shares issued - - - 563 - 563
Capital distribution - - - (10 867) - (10 867)
Change in shareholding - - (3 701) (3 701) 24 684 20 983
Balance at 31 August 2018 3 733 31 073 536 210 880 057 143 402 1 023 459
CONDENSED STATEMENT OF CASH FLOWS
Reviewed Audited
Year ended Year ended
31 August 31 August
2018 2017
R'000 R'000
Cash flows from operating activities
Cash generated from operations 104 578 156 188
Finance income 8 989 10 710
Dividends received 3 625 297
Dividends received from associate 3 500 -
Finance costs (106 918) (70 887)
Taxation paid (846) (9 452)
Net cash inflow from operating activities 12 928 86 856
Cash flows from investing activities
Acquisition of property, plant and equipment (56 453) (44 864)
Acquisition of and addition to investment properties (43 097) (2 512)
Proceeds on disposal of non-current assets 27 273 18 489
Loans receivable advanced - (6 647)
Proceeds on disposal of associate - 190 751
Loans advanced to joint ventures and associates (6 589) (8 089)
Loans repaid by joint ventures and associates 3 530 -
Acquisition of associates - (72 384)
Acquisition of held-for-trading and available-for-sale investments (2 805) (120)
Proceeds on disposal of investments 4 543 2 509
Net cash (outflow)/inflow from investing activities (73 598) 77 133
Cash flows from financing activities
Issue of shares 563 92
Acquisition of treasury shares (4 548) (1 108)
Capital distribution (10 867) (8 782)
Decrease in borrowings (110 543) (54 216)
Increase in borrowings 115 176 37 396
Net cash outflow from financing activities (10 219) (26 618)
Net (decrease)/increase in cash and cash equivalents (70 889) 137 371
Cash and cash equivalents at the beginning of the year 169 931 32 560
Total cash and cash equivalents at the end of the year 99 042 169 931
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 2018
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 8 November 2018.
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 auditor's 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 auditor's engagement they should obtain a copy
of the auditor's report together with the accompanying financial information from the company's
registered office.
Reviewed Audited
Year ended Year ended
31 August 31 August
2018 2017
2. Treasury shares
Number of shares held at year-end 43 871 423 650
The weighted average price of the treasury shares purchased during
the year was R2.98 per share (2017: R2.60).
R'000 R'000
3. Related party transactions
Profits from equity accounted joint ventures 16 389 44 342
Profit from equity accounted associates 8 994 3 519
Interest received from associates 99 80
Interest received from joint ventures 1 088 2 060
Administration fees received from associates 78 607
Administration fees received from joint ventures 668 646
Directors' emoluments 13 050 16 069
Reviewed Audited
Year ended Year ended
31 August 31 August
Gross Net Gross Net
2018 2018 2017 2017
R'000 R'000 R'000 R'000
4. RECONCILIATION OF HEADLINE EARNINGS PER SHARE
Headline earnings per share is calculated as follows:
Profit attributable to equity holders of the parent 35 657 291 777
Fair value adjustment on investment properties (32 768) (21 001) (219 883) (119 261)
Fair value adjustments within equity accounted profits (17 254) (8 261) (57 292) (36 701)
Realised profit on sale of associate - - (91 795) (91 795)
Realised (profit)/loss on sale of property, plant
and equipment (2 187) (255) 282 219
Headline earnings 6 140 44 239
Headline earnings per share (cents) 2.8 20.3
Diluted headline earnings per share (cents) 2.6 18.8
The calculation of headline earnings per share is based on the weighted average number of
216 641 331 shares in issue during the year (2017: 217 710 577).
The calculation of diluted headline earnings per share is based on the diluted weighted average
number of 236 083 197 shares in issue during the year (2017: 235 858 407).
5. SEGMENTAL INFORMATION
Property UK Corporate
Gaming investments Education investments and other Total
R'000 R'000 R'000 R'000 R'000 R'000
2018
Revenue - 273 593 40 358 - 3 625 317 576
Net income before tax - 43 031 (3 492) 8 297 3 307 51 143
Total assets - 2 008 620 154 813 84 855 49 422 2 297 710
Total liabilities - 1 266 950 3 793 - 3 508 1 274 251
Net asset value - 598 660 150 627 84 855 45 915 880 057
Intrinsic net asset value - 567 079 225 630 84 855 133 937 1 011 501
2017
Revenue 541 280 619 20 043 - - 301 203
Net income before tax 94 161 308 786 313 439 940 404 639
Total assets - 1 885 744 79 789 72 687 198 991 2 237 211
Total liabilities - 1 275 113 7 769 - - 1 282 882
Net asset value - 506 820 71 807 72 687 198 991 850 305
Intrinsic net asset value - 571 136 94 626 72 687 198 991 937 440
6. SUBSEQUENT EVENTS
The directors are not aware of any material event which occurred after the reporting date and
up to the date of this report, other than those noted below.
7. CAPITAL DISTRIBUTION
The capital distribution of R10.9 million (5.0 cents per share) which was declared on
8 November 2017 was paid to shareholders on 18 December 2017.
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 December 2017.
On 8 November 2018, subsequent to year-end, the board of directors declared a capital
distribution of 5.25 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, 14 December 2018.
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 R11.4 million, being 5.25 cents per share, based on
the current number of 216 188 197 shares in issue.
The income tax reference number of Trematon Capital Investments Limited is 9340/323/84/0.
Last date to trade: Tuesday, 11 December 2018
Ex-date: Wednesday, 12 December 2018
Record date: Friday, 14 December 2018
Payment date: Tuesday, 18 December 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 12 December 2018
and Friday, 14 December 2018, both days inclusive.
CHAIRMAN'S REPORT
The group has made a very successful transition from a passive investment company in 2005 when the
current management took control, to a hub of entrepreneurial businesses with strategic and
operational skills and a proven ability to source and execute value-added transactions across a
wide range of industries.
Four out of the five largest businesses (Aria Property Group, Resi Investment Group, Generation Schools
and ASK Partners) in the group were established and co-founded by the group from scratch and
Club Mykonos, although it was an existing business, has been dramatically reshaped and has had
several new profitable operations added. The group has a philosophy of making well-priced investments
but the real skill in these endeavours is the selection of partners and management who can add value.
The management of the various businesses is independent, and each group company has its own unique
culture and uses the group skills in different ways. Some businesses are relatively passive
investments while others have full operational involvement depending on the business's individual
needs and operating life cycle.
We own some businesses entirely and have the capacity to manage those and we continue to seek out
partners and co-investors in areas where we can bring complementary skills to a transaction.
The majority of our businesses are focused in the Western Cape and the past financial year brought
some unique challenges borne of overall economic weakness and the drought. Despite this, all of our
operations added value and performed creditably.
All of the businesses in the group have the ability to grow. When the economy recovers from the
current recession the growth in intrinsic value should meet or exceed expectations.
The Trematon Group is fortunate to be able to call on an engaged and high-quality board of directors
and experienced and committed management, most of whom have been with the group for at least a
decade. I thank them all for their hard work and dedication.
I have conferred with my colleagues on the board and have indicated to them my intention to
retire from the board at the next AGM. The Trematon journey has been very positive and I have
enjoyed watching the executive group develop into a well-balanced team with diverse skills and a
well-earned reputation for innovation, attention to detail and fair dealing.
Monty Kaplan
Chairman
CHIEF EXECUTIVE OFFICER'S AND CHIEF FINANCIAL OFFICER'S JOINT REPORT
Group intrinsic net asset value ("INAV") exceeded R1 billion for the first time in 2018 and
represents an important symbolic benchmark. In April 2005 Trematon was a very small company with
a limited capital base and no operational businesses. Thirteen years later, the group is now a
recognised innovator with the ability to purchase, establish, manage and exit projects in the
areas of commercial property, residential property, education and leisure.
Trematon's earnings patterns are lumpy. The business has grown its annuity income operations
substantially over the past few years but investment disposals, acquisitions and fair value
adjustments can always create once-off swings in earnings. Over the past year there have been
several realisations and revaluations which have resulted in an 8.5% increase in INAV. A large
portion of the group's investments is backed by property values and the performance of this asset
class has been muted in the past 12 months. This performance compares favourably with our industry
peers.
An important measure of Trematon's value is INAV, which gives shareholders a realistic valuation
of the underlying assets of the business. This is calculated and explained in detail in a separate
INAV report which can be found below.
The 2018 distribution of 5.25 cents per share is an increase of 5% over the prior year, which
represents eight years of uninterrupted distribution growth.
The group has five major investments of which four were new ventures from inception. Head office
involvement in each business varies depending on the stage of growth and the specific needs of the
business. Each entity has committed, incentivised and competent management and each has growth
prospects which have the potential to achieve the group's target internal rate of return ("IRR")
of 20% per annum. We are under no illusions that this target will be easily achieved, and the
South African economy would need to improve in order for us to meet our objectives, but we are
well positioned to access growth in each market segment.
RESULTS
Group revenue (excluding sales of property and land) grew 61% which reflects the increased annuity
income component of our operating businesses. Rental income increased due to the letting-up of the
Pier Place redevelopment and school income increased as a result of the opening of new schools and
an increase in student numbers.
The group's total comprehensive income for the year attributable to equity holders was
R44.5 million (2017: R305.4 million). This translates into earnings per share of 16.5 cents
(2017: 134.0 cents) and headline earnings per share of 2.8 cents (2017: 20.3 cents).
This decrease in earnings and headline earnings was mainly due to a large once-off profit in the
prior year from the sale of the Mykonos Casino and the adjacent land. Fair value adjustments
on investment properties were at a lower level than the prior year. There were also increases
in operating expenses, resulting from the acquisition of additional properties in Aria Property
Group and the increase in school operating expenses in Generation Education which is in line with
expectations and the projected growth of the businesses.
Net asset value ("NAV") has increased by 4.1% to 407 cents (2017: 391 cents) per share while INAV,
which provides investors with a realistic and transparent evaluation of Trematon's performance and
value, increased by 8.5% to 468 cents (2017: 431 cents) per share. NAV reflects the book values
of the various investments in terms of IFRS, but does not take into account the market value of
certain investments such as inventory and investments in joint ventures and associates that are
equity accounted in terms of the required accounting standards. The INAV shows these assets at
their realisable market values.
CLUB MYKONOS LANGEBAAN
(100%) ("CML")
The Club Mykonos Resort performed ahead of its peers in the hospitality industry in the
Western Cape although it was affected by the poor holiday season in Cape Town caused by the
drought and other factors. The various restaurants, the boatyard and the marina generate stable
income. The resort continues to improve steadily with further substantial upgrades to the restaurant
facilities and conference centre planned for early 2019.
CML's contribution to INAV grew by 4% due to increases in property values and its contribution
to group profit was R10.7 million (2017: R141.8 million). The prior-year profits included the sale
of the Mykonos Casino and vacant land adjacent to the casino. During the current year the latest
development ("Marina Edge") which consists of 16 serviced plots on the edge of the Mykonos Marina,
was launched, with nine plots having been sold to date. Sales prices range from R2 million to
R3 million per plot.
The Mykonos Marina showed strong growth even in the current difficult economic conditions and remains
fully let with a substantial waiting list.
The Club Mykonos Boatyard, which has become an integral part of the Club Mykonos service offering,
is also at full capacity. It includes 257 lock-up storage units in various sizes to accommodate a
range of different storage needs.
CML continues to provide a stable income stream to the group with scope to increase value in the
future via targeted development of the remaining zoned land, although the contribution to INAV is
likely to grow at a slower rate than other group assets.
RESI INVESTMENT GROUP
(100%) ("RESI")
Resi's portfolio of mid-range apartments provides stable income and some trading profits, albeit
in a tighter market with rentals and property values under pressure. The ability to grow the
business has, however, been hampered by a lack of suitable stock. While we remain committed to the
residential sector in the Western Cape, it is our intention to diversify into other regions of
South Africa in order to expand the Resi portfolio and secure the growth of the business.
We do trade in some units where we feel we have achieved our target with respect to maximum value
gained. We continuously review our portfolio and where we feel the value has reached its maximum,
we look to offload those properties and recycle the cash into new deals.
Resi's contribution to INAV decreased by 5% due to slight decreases in fair value adjustments.
Resi contributed R3.6 million (2017: R28.3 million) to group profits.
Resi's future contribution to group INAV is dependent on our ability to source attractively priced
residential stock. Several potential transactions have been identified and will be announced when
and if they are finalised.
GENERATION EDUCATION
(87%) ("GENERATION")
Generation has been operating since January 2016 and is still in an early growth phase. There are
currently five operating schools with over 900 students (2017: 500 students) enrolled. We have
secured three additional sites for which we are awaiting zoning approval and one site is currently
under construction which is expected to be open in January 2019.
Two of the five operating schools, Blue Moon in Plumstead and Generation Melkbos, are full and have
waiting lists. Generation Sunningdale and Generation Hermanus have completed their expansions to
include middle schools and intake has exceeded our projections. The younger age groups, up to
age 12, are full at both the Sunningdale and Hermanus campuses. During the year an existing school
was purchased in Hout Bay and will soon be undergoing expansion and refurbishment.
Revenue has grown by 102% to R40.4 million (2017: R20 million) while Generation contributed
R1 million (2017: R0.1 million) to group profits, which is a creditable performance given that
expense ratios are inevitably higher in the start-up phases. Generation's contribution to INAV
increased by 138% mainly due to increased investment in new school sites and organic growth within
the schools. This was funded by group cash on hand.
ARIA PROPERTY GROUP
(60%) ("ARIA")
Aria's focus continues to be in the Western Cape and the company's brand value and local
reputation have grown significantly over the past few years.
A highlight of the year was the highly successful redevelopment and tenanting of Pier Place,
a 14-floor commercial office block on Cape Town's Foreshore.
Despite a generally weak property market, the Aria team's ability to add value to underutilised
assets has enabled asset value growth. The past financial year has been strong with the company
focusing on the strengthening of both its income statement and balance sheet. Aria's contribution
to INAV was similar to the previous financial year. Aria contributed R36 million (2017:
R180.8 million) to group profits. Fair value adjustments in the current year have been lower than
the prior year but the operating scale of the business has increased.
Further redevelopments are planned for the next financial year. The portfolio is comprised almost
entirely of medium-sized institutional grade properties and opportunities to add value and enhance
the overall portfolio quality are being investigated.
ASK PARTNERS
(40%) ("ASK")
Towards the end of 2017 Trematon invested R72.4 million in ASK, which is based in the
United Kingdom. The business provides innovative structured financing to property developers in the
UK. This is currently Trematon's only offshore investment and meets our basic investment criteria
based on projected investment returns in British Pounds and is not on any currency view.
ASK's contribution to group INAV grew 17% in the current financial year. The business is valued at
cost plus equity accounted profits and any foreign exchange gains/losses. The business generated
R12.2 million (2017: R0.4 million) profit for the group, which includes a R3.9 million forex gain.
By the end of August 2018 ASK had completed 13 deals with a combined loan amount of £45 million
(approximately R860 million).
The investment has exceeded initial budgets and projections, both in terms of loans written and
syndications and is on track to achieve our return objectives.
CONCLUSION
Trematon makes investments based on an attractive entry price and the potential to add value such
that an IRR of 20% can be achieved on a three to five-year time frame. Each investment base case
uses assumptions that we feel are conservative and we do not spend a large amount of time trying
to forecast macroeconomic trends. However, without economic growth, it is difficult to forecast
large increases in INAV with confidence. We are well positioned to capitalise on any increase in
economic activity while weathering the current subdued economic realities.
Trematon has grown its INAV consistently since current management took over in 2005 and has
increased distributions every year for the past eight years. The core management team has remained
stable over this time and has consistently displayed an ability to identify, execute, manage and
exit value-added transactions through both positive and negative economic cycles.
The prevailing stock market investment conditions do not favour investment holding companies,
most of which are trading at substantial discounts to INAV. Most commentators note that the current
discount to INAV for investment holding companies is at historically unprecedented levels.
A critical question that investors might ask is how accurate the group's stated INAV is. Trematon
has recycled its equity several times over the past 13 years and the group has not taken any INAV
write-downs as the result of exiting investments. This is an indication that the stated INAV is
realistic and represents the true after-tax value of the group's assets.
Our long-standing chairman, Monty Kaplan, has announced his intention to retire at the company's
next AGM and the board is currently considering an appropriate replacement as well as other
additions to the board. Monty has been a calm and thoughtful presence in our boardroom for the
past 13 years and we thank him for his contribution to the group thus far. He has indicated that
he will, in future, continue to be available to the group for counsel as required.
Arnold Shapiro Arthur Winkler
Chief Executive Officer Chief Financial Officer
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 year ended 31 August 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.
The intrinsic net asset value is also presented as part of the group's segment information in the
audited annual financial statements and for comparative purposes, the prior year's information is
also presented.
Intrinsic value
Year ended Year ended
31 August 31 August
2018 2017
Notes R'000 R'000
Club Mykonos Langebaan 1 138 246 132 836
Aria Property Group 1 227 199 226 860
Resi Investment Group 1 201 634 211 440
Generation Education 2 225 630 94 626
ASK Partners 3 84 855 72 687
Other 4 34 895 29 060
Cash 99 042 169 931
Total 1 011 501 937 440
Number of shares in issue 216 144 326 217 347 679
INAV per share (cents) 468 431
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 a combination of discounted cash flows and price-
earnings models. The school properties are carried at market value using directors' valuations
for completed schools and build costs incurred to date on school properties under construction.
3 The investment is carried at cost plus equity accounted profits and foreign currency gains/losses
at year-end.
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 15176, Vlaeberg, 8018, South Africa
Contact details
Tel: 021 421 5550
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
Transfer secretaries
Link Market Services South Africa (Pty) Limited
19 Ameshoff Street, Braamfontein, 2001
Sponsor
Sasfin Capital, a member of the Sasfin Group
Auditor
Mazars
Engagement partner - Yolandie Ferreira
Published date
19 November 2018
Prepared by
The group financial results have been prepared under the supervision of the chief financial officer,
Mr AL Winkler CA (SA).
The preliminary condensed consolidated results have been independently reviewed in compliance with
the requirements of the Companies Act of South Africa.
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