| Thu 20 Nov 2008, 15:06 | | TMT - Trematon - Audited results for the year ended 31 August 2008 |
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TMT - Trematon - Audited results for the year ended 31 August 2008
TREMATON Capital Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008691/06)
Share code: TMT ISIN: ZAE000013991
("Trematon")
AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2008
Directors` Review
We are pleased to report the financial results of the group for the 12 months
ended 31 August 2008. The current management team has been in place for more
than three years and the group has undergone significant transformation during
this time.
Trematon Capital Investments Ltd is an investment group with investments,
subsidiaries and associates engaged in a variety of industries which make up its
investment portfolio. Most of the investments are in the Western Cape and are
related in some way to property or gaming.
The primary aim of the group is to generate superior risk-adjusted long-term
returns for its shareholders.
Commentary on financial results
Shareholders should note that SA REIT Ltd ("SA REIT") was accounted for as a
subsidiary in the previous period and an associate in the current period and
Club Mykonos Langebaan Ltd ("CML") was consolidated for the first time so the
results are not readily comparable with the prior year figures.
Reported net asset value (NAV) increased to 88c (2007: 84c). SA REIT Ltd is
equity accounted for as an associate in terms of IAS 28 so changes in the market
value of its shares are not reflected in the NAV. If SA REIT had been accounted
for purely as an investment, the pro forma NAV would have been approximately
82.5c.
We believe this is a creditable performance in a period which includes a
substantial markdown in the value of financial assets in general. Shareholders
should, however, be aware that a material proportion of the measured NAV is
determined by subjective valuations of unlisted assets which do not have a
readily determinable market value. Such valuations, however prudently and
diligently arrived at, are ultimately guesswork. The group also has borrowings
and the double-edged sword of leverage will play a role in determining the
future NAV. The debt/equity ratio of the Trematon Group (excluding CML, which is
in a net cash position) is approximately 60%.
Basic earnings per share increased to 19.7c (2007: 4.6c) and headline earnings
per share increased to 5.5c (2007: 1.5c). Shareholders are referred to note 2
which provides a reconciliation between the two measures of earnings per share.
The primary reasons for the difference between the two measures is a change in
the effective percentage shareholding of SA REIT giving rise to a profit on
change in shareholding in the income statement and a change in the basis of
accounting for the interest in CML from an investment to a subsidiary which is
now consolidated for the first time.
Share trading activities resulted in a net loss for the period but this was off-
set by other sources of income. All listed investments, other than SA REIT as
discussed above, have been marked to market at the end of the period and all
profits and losses accounted for. Where necessary the value of receivables has
been impaired to reflect the underlying value of the asset.
Commentary on individual investments
Club Mykonos Langebaan Ltd
The group owns 34.2% of CML. In the prior reporting period Trematon had no
influence over CML`s operations and no representation on its board, therefore
CML was accounted for as an investment. With effect from 24 April 2008 Trematon
obtained de facto control of CML via the exercise of its votes at a general
meeting of the company and it is accordingly consolidated as a subsidiary.
CML`s major assets are all situated near Langebaan on the West Coast
(approximately 100 km from Cape Town) and include 29.6% of the Mykonos Casino, a
conference centre, restaurants and various rental properties, vacant land and
developed residential erven. Gaming revenues in the Western Cape have declined
slightly in comparison with the equivalent period last year but the casino is
currently undergoing a major refurbishment and is well placed to capitalise on
any recovery in consumer spending. The commercial and rental assets currently
generate net losses after the allocation of head office overheads and the board
of CML is investigating ways to address this. The vacant land and developed
erven are well located in prime coastal locations but the property market in the
area is weak and the environment for developing and/or realising these
properties is currently not optimal.
SA REIT Ltd
The group owned 18.4% of SA REIT at year-end. Three Trematon directors are also
directors of SA REIT and it is accordingly classified as an associate and equity
accounted. Shareholders are referred to the SENS announcement reporting SA
REIT`s financial results for the year to 31 August 2008 which were published
on 31 October 2008.
SA REIT is a property company which holds a mix of high-quality commercial and
industrial property assets, mainly in the Western Cape. The portfolio comprises
both investment properties and development opportunities.
During the previous financial year Trematon entered into a transaction with a
property vendor in terms of which the vendor was granted a put option in respect
of 16 million SA REIT shares at 50c per share. The put option was exercised in
November 2008. If the put option had been exercised at year-end it would have
resulted in a mark-to-market loss of R0.8 million and Trematon`s
effective shareholding in SA REIT would have increased to 21.1%.
On 11 November 2008, the name of SA REIT Ltd was changed to Ingenuity Property
Investments Ltd. The name change will be reflected on the JSE on Monday, 24
November 2008.
Faircare Trust (Formerly the RV Holdings Trust)
The Faircare Trust, of which Trematon effectively owns 35%, is responsible for
the management and operation of up-market retirement villages based mainly in
the Western Cape. The villages are all well established and highly regarded and
operate under a variety of ownership structures which are tailored to the needs
of their customers. All of the villages comprise residential units, assisted
living suites, frail care and catering facilities. The villages include Cle du
Cap (situated in Tokai), Noordhoek Manor, Onrus Manor, Heritage Manor and
Bridgewater Manor (both situated in Somerset West).
Grand Parade Investments Ltd ("GPI")
Trematon owns 2.7% of GPI which is accounted for as an investment. Shareholders
are referred to the reviewed results of GPI for the period to 30 June 2008 which
were published on SENS on 2 September 2008.
GPI is in a healthy financial position. The latest gaming industry statistics
for the Western Cape suggest that GPI`s next financial year will not show the
same rate of growth as in the previous two years, but indications are that
dividends will at least be maintained in the 2009 financial year.
Mazor Group Ltd ("Mazor")
Trematon owns 7.2% of Mazor indirectly via a 49% holding in Cloudberry
Investments 18 (Pty) Ltd. Cloudberry is controlled by a BEE entity and is
partially funded via a loan from Trematon. The value of the loan receivable is
adjusted to reflect the value of the underlying security at year-end.
Shareholders are referred to the interim results of Mazor which were published
on SENS on 10 November 2008 in which it was indicated that Mazor is likely to
achieve the earnings per share forecast of 44c contained in its prospectus for
the year ending 28 February 2009 and that a dividend is likely to be declared.
Property investments
Stalagmite (Pty) Ltd
Stalagmite is a development comprising prime industrial land in Strand at the
Broadway Industrial Park adjacent to the route of the proposed route of the new
N2 highway. Stalagmite is 50% held and is equity accounted. No profits have yet
been accounted for in this entity as the transfers of property to buyers had not
yet taken place at year-end.
The partners in the joint venture are Gateway Property Developers (Pty) Ltd who
have managed the project since inception.
Subsequent to year-end the transfers of land sold to date were effected and all
bank borrowings and loans due to Trematon have been repaid in full with accrued
interest. The remaining inventory is well located and the board, in conjuction
with our joint venture partners, is investigating the best way to maximise value
for shareholders. This development is expected to make a contribution to group
profits in the 2009 financial year.
Boulevard Park
Trematon owns an effective 37.5% interest in Boulevard Park which is a premier
grade development located adjacent to the N2 highway on the Cape Town CBD
periphery. The development is well under way and delivery of all the buildings
is expected to take place in March 2009. The development comprises seven office
towers comprising 38 000 square metres of office space and 1 980 parking bays.
Five of the seven towers have been sold and letting has commenced. This
development is expected to make a contribution to group profits in the 2009
financial year.
Wembley Square II
Trematon owns an effective 40% interest in Wembley Square II which is located
opposite Wembley Square and is a co-operative venture with Faircape which was
the original developer of Wembley Square. The site is in a highly desirable
development node and plans are under way to maximise the value of the
investment. This project is still in the relatively early stages of conception
and is not expected to contribute to profits in the current financial year.
Prospects
Trematon is an investment group and is therefore dependent to some extent on the
overall investment climate. Many of the group`s investments are linked to the
property market in general and the performance of the property sector will be a
key determinant of returns in the current financial year. The investment
portfolio is of high quality and should yield good long-term returns but short-
term prospects are uncertain. Management will focus on bringing current projects
to fruition and reducing gearing. The board is not unduly pessimistic regarding
economic prospects but we believe that it is prudent to assume that the current
uncertain investment climate will persist for an extended period of time.
BALANCE SHEET
Audited Audited
31 August 31 August
2008 2007
R`000 R`000
ASSETS
Non-current assets 289 456 102 397
Property, plant and equipment 12 506 104
Investments 259 234 99 329
Deferred tax asset 1 122 -
Loans receivable 9 073 2 964
Long-term receivables 7 521 -
Current assets 77 764 61 569
Investments 6 146 -
Inventory 31 938 -
Tax receivable 1 292 148
Trade and other receivables 3 848 1 520
Cash and cash equivalents 34 540 59 901
Total assets 367 220 163 966
EQUITY AND LIABILITIES
Equity 252 092 153 627
Share capital and share premium 203 296 203 296
Fair value reserve 13 409 40 249
Accumulated loss (62 697) (97 115)
Total equity attributable to equity holders of
the parent 154 008 146 430
Minority interest 98 084 7 197
Non-current liabilities 63 116 8 388
Long-term loans payable 58 218 -
Deferred tax liability 4 898 8 388
Current liabilities 52 012 1 951
Secured debentures 9 681 -
Loans payable 34 358 -
Tax payable 22 1 784
Trade and other payables 7 902 153
Bank overdraft 49 14
Total equity and liabilities 367 220 163 966
Net asset value per share (cents) 88 84
(based on shares in issue at end of year)
INCOME STATEMENT
Audited Audited
Year ended Year ended
31 August 31 August
2008 2007
Notes R`000 R`000
Revenue 19 300 18 409
Trading profit 1 362 6 404
Investment income 9 079 6 371
Finance costs (8 060) (792)
Fair value reserve recognised in profit 15 715 -
Profit on change in shareholding 12 610 -
Impairment of loan (4 262) -
Profit/(loss) from equity accounted
investments (net of tax) 7 074 (247)
Profit before taxation 33 518 11 736
Taxation 1 323 (2 662)
Profit for the year 34 841 9 074
Attributable to:
Equity holders of the parent 34 419 8 115
Minority interest 422 959
34 841 9 074
Number of shares issued (thousands) 174 873 174 873
Weighted average number of shares
(thousands) 174 873 174 873
Earnings per share (cents) 19.7 4.6
Headline earnings per share (cents) 2 5.5 1.5
CASH FLOW STATEMENT
Audited Audited
Year ended Year ended
31 August 31 August
2008 2007
R`000 R`000
Cash flows from operating activities
Cash used in operations 2 243 (7 653)
Interest received 7 966 4 906
Dividends received 1 113 1 465
Finance costs (8 060) (792)
Tax paid (1 387) (6 294)
Net cash from operating activities 1 875 (8 368)
Cash flows from investing activities
Acquisition of equipment (31) (91)
Decrease in investment in subsidiary (12 681) -
Acquisition of subsidiary, net of cash acquired 33 041 8 162
Increase in loans receivable (87 569) (2 964)
Decrease in loan in dilution of subsidiary 1 509 -
Loan repaid/(advanced) to joint venture 1 997 (3 016)
Acquisition of investments (65 939) (49 655)
Proceeds from sale of investments 9 831 93 034
Net cash from investing activities (119 842) 45 470
Cash flows from financing activities
Increase in borrowings 92 576 -
Net cash from financing activities 92 576 -
Net (decrease)/increase in cash and cash
equivalents (25 391) 37 102
Cash and cash equivalents at the beginning of the
year 59 887 22 788
Effect of exchange rate movement on cash balances (6) (3)
Total cash and cash equivalents at the end of
the year 34 490 59 887
STATEMENT OF CHANGES IN EQUITY
Total Fair
Share Share share value
capital premium capital reserve
R`000 R`000 R`000 R`000
Balance at 1 September 2006 1 749 201 547 203 296 7 095
Total recognised income - - - 33 154
Profit for the year - - - -
Total income recognised
directly in equity - - - 33 154
Fair value gain on
available-for-sale investments - - - 28 646
Fair value loss on
available-for-sale investments
realised through income statement - - - 4 508
Acquisition of subsidiary - - - -
Total equity at 31 August 2007 1 749 201 547 203 296 40 249
Balance at 1 September 2007 1 749 201 547 203 296 40 249
Total recognised income - - - (26 840)
Profit for the year - - - -
Total income recognised
directly in equity - - - (26 840)
Change in rate recognised in
equity - - - 235
Fair value loss on
available-for-sale investments - - - (11 516)
Fair value gain on
available-for-sale investment - - - 8 479
Fair value reserve release on
consolidation of
Club Mykonos Langebaan Limited - - - (13 514)
Dilution of SA Reit Limited - - - (9 623)
Fair value reserve realised on
sale of investments - - - (901)
Acquisition of subsidiary - - - -
Total equity at 31 August 2008 1 749 201 547 203 296 13 409
Accumu-
lated Minority Total
loss Total interest equity
R`000 R`000 R`000 R`000
Balance at
1 September 2006 (105 230) 105 161 - 105 161
Total recognised income 8 115 41 269 1 245 42 514
Profit for the year 8 115 8 115 959 9 074
Total income recognised
directly in equity - 33 154 286 33 440
Fair value gain on
available-for-sale
investments - 28 646 286 28 932
Fair value loss on
available-for-sale
investments realised
through income statement - 4 508 - 4 508
Acquisition of subsidiary - - 5 952 5 952
Total equity at
31 August 2007 (97 115) 146 430 7 197 153 627
Balance at 1 September 2007 (97 115) 146 430 7 197 153 627
Total recognised income 34 418 7 578 (7 197) 381
Profit for the year 34 418 34 418 422 34 840
Total income recognised
directly in equity - (26 840) (7 619) (34 459)
Change in rate recognised
in equity - 235 - 235
Fair value loss on
available-for-sale
investments - (11 516) - (11 516)
Fair value gain on
available-for-sale
investment - 8 479 - 8 479
Fair value reserve release
on consolidation of
Club Mykonos Langebaan Limited - (13 514) - (13 514)
Dilution of SA Reit Limited - (9 623) (7 619) (17 242)
Fair value reserve
realised on sale of investments - (901) - (901)
Acquisition of subsidiary - - 98 084 98 084
Total equity at
31 August 2008 (62 697) 154 008 98 084 252 092
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 2008 comprise the company and its subsidiaries
(together referred to as the `group`) and the group`s interest in jointly
controlled entities.
The financial statements were authorised for issue by the directors on 17
November 2008.
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS), IAS 34 - Interim Financial Reporting, the
Listings Requirements of the JSE Limited and the South African Companies Act.
The financial statements have been prepared on the going concern basis.
All significant accounting policies have been consistently applied to all
periods presented and throughout the group.
The consolidated annual financial statements and the company annual financial
statements are stated in Rands, which is the company`s functional and
presentation currency.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses.
The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The 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 if the revision affects only that period, or the period of
the revision and future periods if the revision affects both current and future
periods.
KPMG Inc. has provided an unqualified audit opinion, which is available for
inspection at the company`s registered office, on the annual financial
statements for the year ended 31 August 2008, which have been summarised for the
purposes of this report.
Audited Audited
Year ended Year ended
31 August 31 August
2008 2007
R`000 R`000
2 Headline earnings per share
Headline earnings per share is calculated as follows:
Profit attributable to equity holders of the parent 34 419 8 115
Realised profit on available-for-sale
investments, net of minority interest (1 985) (6 206)
Realised gain on change in shareholding (12 610) -
Fair value realised on investment (15 715) -
Impairment of loan 4 262 -
Tax effects, net of minority interest 1 285 786
Headline earnings 9 656 2 695
Headline earnings per share (cents) 5.5 1.5
Diluted headline earnings per share (cents) 5.5 1.5
The calculation of headline earnings per share is based on the weighted average
number of 174 872 545 shares in issue during the year (2007: 174 872 545).
Domicile and registered office:
42 Hans Strijdom Avenue, Foreshore, Cape Town, 8001
PO Box 7677, Roggebaai, 8012, South Africa
Transfer Secretaries: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001
Principal banker: Investec Bank Limited
Directors: M Kaplan (Chairman)*, A J Shapiro (CEO), A Groll, A M Louw*,
R Stumpf * * Non-executive
Secretary: S Litten
Auditor: KPMG Inc.
Contact details: Tel: (021) 421-5550
Fax: (021) 421-5551
20 November 2008
Cape Town
Sponsor: Sasfin Capital
A division of Sasfin Bank Limited
Date: 20/11/2008 15:06:19 Produced by the JSE SENS Department.
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employees and agents accept no liability for (or in respect of) any direct,
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howsoever arising, from the use of SENS or the use of, or reliance on,
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