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Trematon Capital Investments Ltd HY 2013 results

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Trematon Capital Investments Ltd HY 2013 results

Trematon Capital Investments Ltd HY 2013 results

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  • 1. Unaudited Interim Results (Incorporated in the Republic of South Africa) (Registration number 1997/008691/06) Share code: TMT  ISIN: ZAE000013991 (“Trematon” or “the company”) for the six months ended 28 February 2013 Directors’ review Commentary on financial results Net asset value (“NAV”) has remained unchanged since year-end at 121 cents per share. The group remains in a healthy financial position. On a consolidated basis the group is in a net cash position although our property associates have appropriate gearing associated with specific investments. Interim earnings per share decreased by 53% to 1.5 cents per share (2012: 3.2 cents per share). Headline earnings fell by 40% to 1.5 cents per share (2012: 2.5 cents per share). The reason for the drop in earnings is a R9 million once-off charge in the income statement which arose from the settlement of a call option in respect of 3.5 million ordinary shares in Club Mykonos Langebaan (Pty) Limited (“CML”). The option arose from an incentive structure which was put in place to compensate a party who was instrumental in the original Club Mykonos transaction. Trematon continues to own 100% of the shares in CML and there is no further exposure in this regard. Revenue for the group includes interest income, dividends and sale of properties at Club Mykonos in Langebaan. The revenue figure is included for disclosure purposes in terms of IFRS requirements but is not an accurate reflection of the level of activity within the group. Revenue declined to R9.9 million (2012: R12.4 million) due to special dividends received in the prior period as well as a decline in interest received on loans that have been repaid. Total trading losses before other forms of income but including the R9 million charge referred to above amounted to R12.7 million (2012: R6.7 million). Share trading losses were also incurred on the final realisation of all shares held in Dorbyl Limited – the losses were partially offset by profits on other share trades. All holdings are marked-to-market at the end of the reporting period. Investment income has declined due to the repayment of loans previously extended to joint ventures. The reversal of provision for impairment is due to the improvement in the performance of the listed shares held in Cloudberry Investments. The increase of the NAV of the entity is directly related to the value of the loans due from the investment. Profit from equity accounted investments include equity accounted profits from Arbitrage Property Fund, Resi Investment Trust and the Mykonos Casino. All of these investments have shown improved growth over the interim period, contributing to an increase in equity accounted earnings over the prior comparable interim period. Trematon’s investment in joint ventures has increased due to additional funding of R9.3 million for the purchase of properties as well as earnings recognised which increase the carrying value of the investments. Cash balances amounted to R33.6 million at the end of the period. This balance is variable during the year and depends on the timing of investments and realisations. Investment overview Club Mykonos Langebaan The CML group made a profit for the period of R7.6 million compared to a profit of R4.5 million in the prior comparable interim period. The major component of the profits is the equity accounted profits from the Mykonos Casino. The resort continues to show improvement due to ongoing operational refinements and the results of the refurbishment programme. Both rental and timeshare occupancies are high by industry standards and revenues from commercial operations are showing good levels of growth. Club Mykonos offers a family-friendly resort holiday experience and the investment in the brand has shown positive results which are reflected in increased turnover and increased foot traffic. At the RCI “OSCA” awards held in March 2013, Club Mykonos was rated amongst the top 4 large resorts in the country in the premier Gold Crown Category and the resort general manager was recognised by a nomination for general manager of the year. Club Mykonos is now firmly established as one of the favoured family holiday destinations in the country and has recently been awarded a 4-star grading by the Tourism Grading Council of South Africa. The Club Mykonos Marina continues to expand, the number of jetties has been increased further to the limits of the current space available and the Mykonos Boatyard is now well established as a value-added boating and general storage facility offering storage for 140 large and medium sized crafts. Phase 2 of the boatyard has commenced and storage units are being constructed as demand dictates. There is significant potential for new developments at the resort when market circumstances are suitable. Arbitrage Property Fund (“Arbitrage”) – 50% interest Arbitrage continues to focus on value opportunities in the commercial and industrial property space. The low yields prevailing in the sector and the large increase in demand from listed property vehicles have reduced the number of opportunities which are available. The current portfolio is performing very well and new investments will be made on a selective basis. Properties with a cost price of R188 million has been purchased to date. Trematon has increased its mezzanine funding to Arbitrage to a total of R22.3 million at the end of the period. STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME Notes ASSETS Non-current assets Property, plant and equipment Investment properties Investments Investments in joint ventures Investments in associate entities Deferred tax asset Current assets Loans receivable Trade and other receivables Investments Inventory Tax receivable Cash and cash equivalents Non-current assets held for sale Total assets Unaudited 28/29 February 2013 2012 R’000 R’000 Audited 31 August 2012 R’000 159 857 6 500 21 098 16 120 28 985 85 582 1 572 96 680 14 181 4 156 17 175 28 396 2 32 770 – 256 537 215 014 209 259 (2 559) 10 694 1 567 (3 947) 215 014 – 12 760 6 533 6 227 29 171 884 – 9 28 278 – – 199 828 203 296 (1 276) 3 331 121 (16 695) 188 777 11 051 4 450 – 4 450 34 312 5 400 6 898 9 20 679 – 1 326 214 758 209 259 (1 239) 8 156 843 (2 261) 214 758 – 11 423 5 794 5 629 30 356 884 – 27 28 072 1 373 – 238 590 121 Audited Year ended 31 August 2012 R’000 Trading (loss)/profit Investment income Finance costs Reversal of provision for impairment Profit from equity accounted investment (net of tax) Share-based payment expense Profit before taxation Taxation Profit for the period/year (3 110) 2 808 1 976 8 891 (339) (4 408) 634 6 452 (5 142) 2 537 6 016 4 446 (732) (3 476) – 3 649 (1 766) (1 072) – (10 421) – (9 270) (2 165) 19 689 (5 005) (2 975) (6 817) 1 568 – – (18 904) (15 560) 11 245 (31 443) (3 599) (8 425) 392 – 40 672 (14 113) (23 791) 15 990 7 126 Cash flows from financing activities Change in shareholding of subsidiary Acquisition of treasury shares Decrease in creditors Increase/(decrease) in borrowings Net cash from financing activities – (1 320) – 739 (581) – – (186) (10 775) (10 961) 318 12 256 (958) 3 987 7 419 (843) 22 179 (2 936) 19 243 Total comprehensive income for the year 3 120 – (582) 2 538 5 260 (2 288) – 320 (1 968) 4 012 1 508 2 302 (953) 2 857 22 100 Profit attributable to: Equity holders of the parent Non-controlling interest Profit for the period 2 722 – 2 722 5 638 342 5 980 18 901 343 19 244 5 260 – 5 260 3 670 342 4 012 21 757 343 22 100 178 096 176 761 1.5 1.4 1.5 1.4 173 821 173 821 3.2 3.2 2.5 2.5 178 096 174 553 10.8 10.4 6.8 6.5 866 32 770 33 636 (38 755) 40 830 2 075 (8 060) 40 830 32 770 Total comprehensive income attributable to: Equity holders of the parent Non-controlling interest Earnings per share Number of shares issued (thousands) Weighted average number of shares (thousands) Earnings per share (cents) Diluted earnings per share (cents) Headline earnings per share (cents) Diluted headline earnings per share (cents) Balance at 1 September 2011 Total comprehensive income for the year Profit for the year Fair value gain on available-for-sale investments Fair value gain on revaluation of property, plant and equipment Tax effects on revaluations Net share sales Share-based payment Dividends paid Issue of ordinary shares to acquire balance of shares in subsidiary Balance at 31 August 2012 Balance at 1 September 2012 Total comprehensive income for the year Profit for the period Fair value gain on available-for-sale investments Tax effects on revaluations Share purchases Share-based payment Dividends paid Change in shareholding in subsidiary Balance at 28 February 2013 Treasury shares R’000 (1 277) – – Fair value reserve R’000 5 299 2 857 – Sharebased payment reserve R’000 – – – Accumulated loss R’000 (18 857) 18 901 18 901 Total R’000 188 461 21 758 18 901 Minority interest R’000 10 709 343 343 Total equity R’000 199 170 22 101 19 244 Share capital R’000 1 749 – – Share premium R’000 201 547 – – – – – – 1 508 – – 1 508 – 1 508 – – – – – – – – – – – – – – – – – 38 – – 2 302 (953) – – – – – – 843 – – – – – (3 476) 2 302 (953) 38 843 (3 476) – – – – – 2 302 (953) 38 843 (3 476) 32 1 781 5 931 207 478 5 963 209 259 – (1 239) – 8 156 – 843 1 171 (2 261) 7 134 214 758 (11 052) – (3 918) 214 758 1 781 – – 207 478 – – 209 259 – – (1 239) – – 8 156 2 538 – 843 – – (2 261) 2 722 2 722 214 758 5 260 2 722 – – – 214 758 5 260 2 722 – – – – – – – – – – – – – – – – – (1 320) – – 3 120 (582) – – – – – – 724 – – – – – (4 408) – 1 781 – 207 478 – 209 259 – (2 559) – 1 567 – (3 947) – 10 694 3 120 (582) (1 320) 724 (4 408) – 215 014 – – – – – – – 3 120 (582) (1 320) 724 (4 408) – 215 014 4 NOTES 1 2 Presentation of Annual Financial Statements Trematon Capital Investments Limited (the “company”) is a company domciled in South Africa. The consolidated financial statements of the company for the period ending 28 February 2013 comprise the company and its subsidiaries (together referred to as the “group”) and the group’s interest in jointly controlled entities and associates. The interim financial statements contain the information required by IAS 34: Interim Financial Reporting and have been prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Listings Requirements of the JSE Limited and the South African Companies Act. The accounting policies are in accordance with IFRS and the same accounting policies and method of computation are followed in these interim financial statements as compared with the most recent annual financial statements. The interim financial statements have been prepared on the going concern basis using a combination of the historical cost and fair value basis 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 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 Mazars. Unaudited Six months ended 28/29 February 2013 2012 R’000 R’000 Non-current assets held for sale Carrying value of non-current asset held for sale Audited Year ended 31 August 2012 R’000 – 29 443 – 724 121 843 2 722 – – 2 722 1.5 1.4 5 638 – – 5 638 2.5 2.5 18 901 (7 072) – 11 829 6.8 6.5 The company entered into an agreement to dispose of its 37.5% interest in the Boulevard Park Trust ("BPT") as disclosed in the SENS released on 26 March 2012. The investment in the BPT was accounted for as an investment in associate in prior periods. In terms of IFRS, the investment has been carried at the lower of carrying value or fair value less costs to sell and reclassified to non-current assets held for sale. 3 Share-based payment reserve Share-based payment expense in terms of the Trematon Share Incentive Scheme In terms of the scheme, which was approved at the annual general meeting of the company on 25 January 2012, participants were issued convertible debentures that can be converted into ordinary shares at the option of the participant after a period of three years. The debentures pay interest at a rate linked to the prime rate of borrowing. A corresponding loan was issued to participants at a rate linked to the prime rate of borrowing. This loan was approved simultaneously with the issue of debentures at the annual general meeting mentioned above. In terms of IFRS 2: Share-based payments, the convertible debentures and corresponding loans receivable have been eliminated in the preparation of these results. The required share-based payment expense has been recognised as an expense and an adjustment to equity. 4 STATEMENT OF CHANGES IN EQUITY Total share capital R’000 203 296 – – 3 Other comprehensive income Fair value gain on available-for-sale investments Fair value gain on revaluation of property, plant and equipment Tax effects on revaluations (2 840) – – (9 496) (12 336) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period/year Total cash and cash equivalents at the end of the period/year Audited Year ended 31 August 2012 R’000 19 702 3 832 (6 692) 8 553 (732) 1 274 2 622 (121) 4 904 1 076 5 980 (8 261) 3 321 6 016 4 446 (958) (3 476) (3 938) (2 850) Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of and addition to investment property Decrease in loans receivable Derivative instrument settled Proceeds on sale of associate Loan advanced to jointly controlled entities and associates Acquisition of held-for-trading and available-for-sale investments Proceeds from disposal of investments Net cash from investing activities Unaudited Six months ended 28/29 February 2013 2012 R’000 R’000 9 912 12 358 1 400 877 (12 666) 4 784 (339) 2 958 8 082 (724) 2 095 627 2 722 STATEMENTS OF CASH FLOW Cash flows from operating activities Cash utilised in operations Finance income Dividends received Dividends received from associate Finance costs Dividend paid Tax received/(paid) Net cash from operating activities Notes Revenue Revenue – other from land sales 256 537 109 Unaudited Six months ended 28/29 February 2013 2012 R’000 R’000 Total equity and liabilities Net asset value per share (cents) 150 358 12 194 11 266 12 324 31 486 81 373 1 715 58 789 10 291 5 208 11 054 28 824 11 3 401 29 443 238 590 121 3 173 307 7 877 22 170 19 240 40 814 82 215 991 83 638 17 139 4 831 – 28 030 2 33 636 – 256 945 256 945 2 EQUITY AND LIABILITIES Equity Share capital and share premium Treasury shares Fair value reserve Share-based payments reserve Accumulated loss Total equity attributable to equity holders of the parent Non-controlling interest Non-current liabilities Loans payable Deferred tax liability Current liabilities Loans payable Creditors Tax payable Trade and other payables Derivative instruments Bank overdraft Resi Investment Trust (“Resi”) – 50% interest Resi is a property investment fund that is focused on purchasing well priced and well located residential developments. The fund has established an excellent track record in the Western Cape where a total of R170 million of transactions have been finalised to date. Most of these transactions are in the final stages of transfer and should be reflected in the full year accounts. Deal flow in this area is still strong and further investments are anticipated in the Western Cape and nationwide. Trematon has increased its mezzanine funding to Resi to a total of R15.5 million at the end of the period. Other The group has maintained its investment in Grand Parade Investments Limited which is held directly and indirectly to a value of R32.8 million. Stalagmite Property Investments (Pty) Limited remains in a sound financial position and will become more active once there is more certainty regarding the proposed N2 highway. The indirect shareholding in Mazor Group Limited has been maintained. Disclosure At present the group has significant property exposure held via its joint venture entities. The rental income, operating expenses, valuations and debt associated with these properties are not fully reflected on the face of the financials. The group is currently exploring alternatives which would make the presentation of the financials more meaningful in this context. Subsequent events Subsequent to the period-end, Trematon entered into agreement in terms of which it purchased a further 16.7% interest in Arbitrage Property Fund (Pty) Limited for a consideration of R4.2 million. The effective date of the transaction was 31 March 2013. This purchase will increase Trematon’s holding in Arbitrage to 66.7%, resulting in Arbitrage being a subsidiary of Trematon from the effective date. Prospects The group has permanent exposure to 3 primary sectors: commercial property, residential property and leisure assets (including casinos). In addition, short-term arbitrage or trading opportunities are pursued as they present themselves. The level of annuity income in the group and the quality of the NAV has increased over the past few reporting periods although earnings can always be influenced in the short term by investment realisations or trading profits and losses. 5 Headline earnings per share reconciliation Headline earnings per share is calculated as follows: Profit attributable to equity holders of the parent Realised profit on sale of associate Tax effects on fair value adjustment of non-current assets held for sale Headline earnings Headline earnings per share (cents) Diluted headline earnings per share (cents) The calculation of headline earnings per share is based on the weighted average number of 176 761 091 ordinary shares in issue during the period (2012: 173 821 416). Segmental information Property Gaming investments Unallocated Eliminations Total R’000 R’000 R’000 R’000 R’000 Unaudited six months ended 28 February 2013 Revenue 1 975 7 937 – – 9 912 Profit/(loss) for the period 9 499 (6 812) 2 235 (2 200) 2 722 Total assets 101 455 140 397 18 132 – 259 984 Total liabilities – 44 970 – – 44 970 Unaudited six months ended 29 February 2012 Revenue Profit/(loss) for the period Total assets Total liabilities 6 015 9 960 101 671 – 6 169 5 832 123 372 38 762 174 (2 826) 13 547 – – (6 986) – – 12 358 5 980 238 590 38 762 Audited year ended 31 August 2012 Revenue Profit/(loss) for the period Total assets Total liabilities 6 015 15 725 116 203 – 13 686 8 311 137 660 41 780 1 (4 792) 16 856 – – – – – 19 702 19 244 270 719 41 780 Domicile and registered office: 2nd Floor, The Hudson, 30 Hudson Street, Cape Town, 8001. PO Box 7677, Roggebaai, 8012, South Africa Transfer secretaries: Link Market Services South Africa (Pty) Limited, 19 Ameshoff Street, Braamfontein 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: S Litten   Sponsor: Sasfin Capital, a division of Sasfin Bank Limited   Auditor: Mazars Published date: 29 April 2013 Prepared by: The group interim financial results have been prepared under the supervision of the chief financial officer, Mr AL Winkler CA(SA). Contact details: Tel: (021) 421 5550, Fax: (021) 421 5551 TBWAP39546/E

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