| Tue 19 Apr 2011, 11:28 | | TMT - Trematon Capital Investments Limited - Unaudited interim results for the |
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TMT - Trematon Capital Investments Limited - Unaudited interim results for the
six months ended 28 February 2011
TREMATON CAPITAL INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/008691/06)
Share code: TMT
ISIN: ZAE000013991
("Trematon" or "the company")
Unaudited Interim Results for the six months ended 28 February 2011
DIRECTORS` REVIEW
Commentary on financial results
Net asset value at the end of the interim period was 103 cents per share (2010:
92 cents per share) which represents an increase of 34% since the August 2010
year-end and 12% since the previous interim period. The directors believe that
the net asset value is a robust but conservative estimate of the value of the
company.
The statement of financial position reflects minimal gearing and sufficient cash
on hand and debt capacity to add new investments during the remainder of the
financial year. The group has weathered the economic hardships of the past few
years and should benefit from any economic upswing while being financially
strong enough to weather future turbulence and take advantage of any
opportunities which arise during such periods.
The biggest change in the statement of financial position is the reduction in
the non-controlling interest which arose from the purchase of further shares in
Club Mykonos Langebaan Limited ("CML") during the period as a result of the
scheme of arrangement referred to below. CML was an 87%-held subsidiary at the
end of the interim period (from 34% at year-end).
Earnings per share amounted to 2.9 cents (2010: 10.6 cents). The reduction in
earnings was mostly a result of income from the sale of buildings in the
Boulevard Park Trust being accounted for in the prior period which were not
repeated in the current period. The group does not have a high component of
annuity earnings and profits generated from the realisation of investments are,
by their nature, lumpy and inconsistent. Investments are conservatively valued
and it is likely that the sale of such investments at the right time will
generate values which are higher than the carrying value. However, the timing of
the realisations is dependent on market conditions and will not occur in an even
pattern.
The group`s operations generated a trading loss of R6.5 million (2010: loss of
R3.7 million). The economic value added in the underlying portfolio is not
fully reflected in the statement of comprehensive income. Most of the gain in
net asset value during the period was taken directly to equity in the statement
of financial position and is not reflected in current income.
The statement of cash flow shows an amount of R25.7 million for cash utilised in
operations. This figure includes an adjustment of R40.2 million which is a non-
cash item in respect of a profit on change in shareholding of a subsidiary. This
results in an overstatement of cash outflows used in operations. In effect cash
generated from operations was a positive R14.5 million.
There were no changes to the board of directors during the period under review.
Commentary on individual investments
Club Mykonos Langebaan Limited
For further information see www.clubmykonos.co.za
CML`s operations have been restructured to a level appropriate for the current
level of economic activity. The CML group made a profit of R4.1 million during
the six-month period. Future growth at CML is heavily dependent on the state of
the property market on the West Coast which remains subdued, but the land
available for development and sale is well located and should generate good
returns. The Mykonos Casino continues to trade well and maintained its overall
profitability in its most recent financial year ended December 2010.
During the current financial year CML entered into a scheme of arrangement with
its shareholders in terms of which Trematon purchased a further 53% of the
ordinary shares in CML, taking its total holding to 87%. This is the biggest
single investment made by Trematon during the period and is expected to yield
good long-term returns once the property market recovers.
Faircare Trust
For further information see www.faircare.co.za
The market for retirement village units is partially dependent on the related
market for ordinary residential units because many retirement unit purchases
are funded by the sale of residential homes. Faircare Trust ("Faircare") has
performed according to expectations in the current period and we are confident
that the embedded value in the contractual agreements in the retirement villages
will prove to be profitable in the long run.
Village management is focused on ensuring that the level of service in the
villages is of the highest possible standards and that our reputation for
world-class health care is maintained and enhanced over time. Since Faircare
maintains an interest in the long-term capital value of the retirement units,
it provides us with an incentive to invest in the village infrastructure and
to ensure that the villages remain well managed with satisfied residents. The
short-term cost of this investment is beneficial to the villages and should
yield good returns as the capital stock improves in value over time.
Other investments
The group has an indirect stake of 7.2% in Mazor Group Limited and a small
direct and indirect minority stake in Grand Parade Investments Limited ("GPI").
The holding in GPI was increased during the period.
For further information see www.mazor.co.za and www.grandparade.co.za
The group also trades in a variety of listed shares and takes short-term
positions from time to time.
Direct property investments
Boulevard Park Trust
The group owns an effective 37.5% interest in the Boulevard Park Trust, which
in turn owns 49% of the Boulevard Office Park. The park is now 94% let, mostly
to blue-chip tenants and occupies a high visibility position adjacent to one of
the main access routes to the CBD. Loans due to Trematon from the Boulevard
Park Trust at the end of the period amounted to R21.9 million (2010: R67.6
million) and further repayments are anticipated during the remainder of the
financial year. This project was brought on stream at an unfavourable time for
the general market, but the low level of vacancies and quality of the rent roll
bear testimony to its appeal as an AAA office park and future growth in the
equity value of the investment is assured.
Other
Loans due from the New Wembley Trust amount to R11.2 million although Trematon
no longer has an equity interest in the venture. The repayment of this loan is
expected to take place shortly.
Subsequent event
Trematon has entered into agreements in terms of which it has acquired a 50%
interest in a property loan stock company with joint venture partners, Brian
Goldberg and Ilan Kaplan. As an initial investment the joint venture has
acquired five properties with a total extent of 20 975 m2 ("the properties")
for a total purchase consideration of R90 million. Details of this transaction
were published on SENS on 31 March 2011.
Prospects
The group has made substantial investments in existing subsidiaries during the
period and new investments as detailed above since the end of the period.
Several further opportunities are under investigation and the trading portfolio
is becoming more active. Economic activity is not yet at a level where high
short-term returns from these assets can be anticipated but the board is
confident that we have made purchases at good entry prices which will reward
shareholders in the years to come.
No interim dividend has been declared but a final dividend is anticipated in the
absence of adverse circumstances.
STATEMENT OF FINANCIAL POSITION
Unaudited Audited
28 February 31 August
2011 2010 2010
R`000 R`000 R`000
ASSETS
Non-current assets 171 431 298 038 178 871
Property, plant and equipment 7 939 7 735 8 117
Investment property 1 786 1 786 1 786
Investments 160 616 287 108 168 148
Deferred tax asset 1 090 1 409 820
Current assets 98 534 79 425 101 280
Loans receivable 18 725 896 10 695
Trade and other receivables 4 120 6 357 4 841
Investments 6 470 13 000 -
Inventory 29 150 30 771 29 946
Tax receivable 12 224 142
Cash and cash equivalents 40 057 28 177 55 656
Total assets 269 965 377 463 280 151
EQUITY AND LIABILITIES
Equity 195 542 258 997 233 506
Share capital and share premium 203 296 203 296 203 296
Treasury shares (3 220) - -
Fair value reserve 5 702 4 763 3 197
Accumulated loss (28 999) (46 428) (71 725)
Total equity attributable to equity
holders of the parent 176 779 161 631 134 768
Non-controlling interest 18 763 97 366 98 738
Non-current liabilities 4 837 4 684 4 429
Deferred tax liability 4 837 4 684 4 429
Current liabilities 69 586 113 782 42 216
Loans payable 26 055 105 511 24 825
Creditors 7 139 7 280 7 266
Tax payable 9 37 2 784
Trade and other payables 21 483 954 1 490
Provisions - - 5 851
Bank overdraft 14 900 - -
Total equity and liabilities 269 965 377 463 280 151
Net asset value per share (cents) 103 92 77
STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Six months ended
28 February
2011
Notes R`000
Revenue 14 812
Trading loss (6 466)
Investment income 9 191
Finance costs (1 490)
Profit on change in shareholding -
Impairment of associate -
Reversal of impairment/(impairment of loan) 861
Profit from equity accounted investment
(net of tax) 3 269
Profit before taxation 5 365
Taxation 170
Profit/(loss) for the period/year 5 535
Other comprehensive income
Fair value gain on available-for-sale
investments 2 505
Profit/(loss) attributable to:
Equity holders of the parent 4 997
Non-controlling interest 538
Profit/(loss) for the period 5 535
Total comprehensive income attributable to:
Equity holders of the parent 7 502
Non-controlling interest 538
8 040
Earnings per share
Number of shares issued (thousands) 172 221
Weighted average number of shares (thousands) 174 326
Earnings per share (cents) 2.9
Diluted earnings per share (cents) 2.9
Headline earnings per share (cents) 2 2.4
Diluted headline earnings per share (cents) 2.4
Unaudited Audited
Six months ended Year ended
28 February 31 August
2010 2010
R`000 R`000
Revenue 9 389 6 877
Trading loss (3 717) (24 558)
Investment income 7 327 14 416
Finance costs (4 806) (6 779)
Profit on change in shareholding 221 -
Impairment of associate (11 426) (468)
Reversal of impairment/(impairment
of loan) (1 008) (3 848)
Profit from equity accounted
investment (net of tax) 34 249 21 915
Profit before taxation 20 840 678
Taxation (94) (3 461)
Profit/(loss) for the period/year 20 746 (2 783)
Other comprehensive income
Fair value gain on available-for-sale
investments 1 833 268
Profit/(loss) attributable to:
Equity holders of the parent 18 549 (7 132)
Non-controlling interest 2 197 4 349
Profit/(loss) for the period 20 746 (2 783)
Total comprehensive income
attributable to:
Equity holders of the parent 20 382 (6 864)
Non-controlling interest 2 197 4 349
22 579 (2 515)
Earnings per share
Number of shares issued (thousands) 174 873 174 873
Weighted average number of shares
(thousands) 174 873 174 873
Earnings per share (cents) 10.6 (4.1)
Diluted earnings per share (cents) 10.6 (4.1)
Headline earnings per share (cents) 17.7 4.3
Diluted headline earnings per
share (cents) 17.7 4.3
STATEMENT OF CASH FLOW
Unaudited Audited
Six months ended Year ended
28 February 31 August
2011 2010 2010
R`000 R`000 R`000
Cash flows from operating activities
Cash utilised in operations (25 744) (3 346) (249)
Finance income 5 686 6 937 14 026
Dividends received 3 505 390 390
Finance costs (1 490) (4 806) (6 779)
Dividend paid (2 583) - -
Tax paid (2 744) (177) (126)
Net cash from operating activities (23 370) (1 002) 7 262
Cash flows from investing activities
Acquisition of property, plant and
equipment (9) (323) (809)
Acquisition of investment property - (340) (340)
Proceeds on disposal of property, plant
and equipment - 13 77
(Increase)/decrease in loans receivable (13 020) (656) 15 571
Loans repaid by/(advanced to) associates 16 894 (15 524) -
Acquisition of investments (17 273) (85) -
Proceeds from disposal of investments 8 396 - 68 500
Net cash from investing activities (5 012) (16 915) 82 999
Cash flows from financing activities
Decrease in creditors (127) (32) (45)
Increase/(decrease) in borrowings 1 230 1 142 (79 544)
Shares repurchased (3 220) - -
Net cash from financing activities (2 117) 1 110 (79 589)
Net (decrease)/increase in cash and cash
equivalents (30 499) (16 807) 10 672
Cash and cash equivalents at the beginning
of the period/year 55 656 44 984 44 984
Total cash and cash equivalents at the
end of the period/year 25 157 28 177 55 656
STATEMENT OF CHANGES IN EQUITY
Share Share Total share
capital premium capital
R`000 R`000 R`000
Balance at 1 September 2009 1 749 201 547 203 296
Total comprehensive income
for the year - - -
Loss for the year - - -
Fair value gain on
available-for-sale investments - - -
Change in shareholding in
subsidiary - - -
Balance at 31 August 2010 1 749 201 547 203 296
Balance at 1 September 2010 1 749 201 547 203 296
Total comprehensive income
for the period - - -
Profit for the period - - -
Fair value gain on
available-for-sale investments - - -
Share repurchases - - -
Dividends paid - - -
Change in shareholding in
subsidiary - - -
Balance at 28 February 2011 1 749 201 547 203 296
Treasury Fair value Accumulated
shares reserve loss
R`000 R`000 R`000
Balance at 1 September 2009 - 2 929 (64 977)
Total comprehensive income for
the year - 268 (7 132)
Loss for the year - - (7 132)
Fair value gain on
available-for-sale investments - 268 -
Change in shareholding in
subsidiary - - 384
Balance at 31 August 2010 - 3 197 (71 725)
Balance at 1 September 2010 - 3 197 (71 725)
Total comprehensive income for
the period - 2 505 4 997
Profit for the period - 4 997
Fair value gain on
available-for-sale investments 2 505 -
Share repurchases (3 220) - -
Dividends paid - - (2 583)
Change in shareholding in
subsidiary - - 40 312
Balance at 28 February 2011 (3 220) 5 702 (28 999)
Minority Total
Total interest equity
R`000 R`000 R`000
Balance at 1 September 2009 141 248 95 477 236 725
Total comprehensive income for
the year (6 864) 4 349 (2 515)
Loss for the year (7 132) 4 349 (2 783)
Fair value gain on
available-for-sale investments 268 - 268
Change in shareholding in
subsidiary 384 (1 088) (704)
Balance at 31 August 2010 134 768 98 738 233 506
Balance at 1 September 2010 134 768 98 738 233 506
Total comprehensive income for
the period 7 502 538 8 040
Profit for the period 4 997 538 5 535
Fair value gain on
available-for-sale investments 2 505 - 2 505
Share repurchases (3 220) - (3 220)
Dividends paid (2 583) - (2 583)
Change in shareholding in
subsidiary 40 312 (80 513) (40 201)
Balance at 28 February 2011 176 779 18 763 195 542
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 for
the period ending 28 February 2011 comprise the company and its
subsidiaries (together referred to as the "group") and the group`s interest
in jointly controlled entities.
The interim financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), IAS 34: Interim
Financial Reporting, AC 500 Standards as issued by the Accounting Practices
Board, the Listings Requirements of the JSE Limited and the South African
Companies Act. The interim financial statements have been prepared on the
going concern basis using a combination of the historical cost and fair
value bases of accounting.
All significant accounting policies have been consistently applied to all
periods presented and throughout the group.
The consolidated interim financial statements are stated in Rands, which is
the company`s functional and presentation currency.
The preparation of interim 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.
The interim financial statements has not been reviewed or audited by KPMG Inc.
Unaudited Audited
Six months ended Year ended
28 February 31 August
2011 2010 2010
R`000 R`000 R`000
2. Headline earnings per share reconciliation
Headline earnings per share is calculated as
follows:
Profit/(loss) attributable to equity holders of
the parent 4 997 18 549 (7 132)
Realised loss on sale of associate - - 11 427
Impairment of investment - 11 426 469
(Reversal of impairment)/impairment of loan (861) 1 008 -
Tax effects on available-for-sale investments,
net of non-controlling interest - - 2 777
Headline earnings 4 136 30 983 7 541
Headline earnings per share (cents) 2.4 17.7 4.3
Diluted headline earnings per share (cents) 2.4 17.7 4.3
The calculation of headline earnings per share is based on the weighted average
number of 174 325 620 shares in issue during the year (2010: 174 872
545).
Domicile and registered office
2nd Floor, The Hudson, 30 Hudson Street, Cape Town, 8001
PO Box 7677, Roggebaai, 8012, South Africa
Contact details
Tel: 021 421 5550 Fax: 021 421 5551
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Directors
M Kaplan (Chairman)*, AJ Shapiro (CEO), AL Winkler (Financial Director), A
Groll, AM Louw*, R Stumpf*
* Non-executive
Secretary
S Litten
Sponsor
Sasfin Corporate Finance, a division of Sasfin Bank Limited
Auditor
KPMG Inc.
19 April 2011
Date: 19/04/2011 11:28:01 Produced by the JSE SENS Department.
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