Trematon Capital Investments reports 488% increase in Earnings Per Share

Arnold Shapiro
Trematon Chief Executive, Arnold Shapiro.

Trematon Capital Investments Limited, an investment group which aims is to generate superior risk-adjusted long-term returns for shareholders, has announced its financial results for the twelve months to 31 August 2017.

The Group’s profit increased to R291.8 million (2016: R49.5 million), resulting in an increase of 488% in Earnings Per Share to 134 cents and a 1 094% increase in Headline Earnings Per Share to 20.3 cents. Net Asset Value (“NAV”) per share increased by 53% to 391 cents and Intrinsic Net Asset Value per share increased by 17% to 431 cents.

We are very pleased by the results which reflect increased profits across the Group supported by the consistent performance of our core operations and focused management.

-Trematon Managing Director, Arnold Shapiro 

The last few years have been transformative for Trematon. We have aggressively recycled capital by realising some of our mature assets and investing in assets with better growth potential. Strategic initiatives such as disposing of some of our Club Mykonos assets, diversifying into education through Generation Education and expanding internationally with our recent investment in ASK Partners have the potential to dramatically reshape Trematon’s net asset value and growth trajectory over the next few years.

Club Mykonos Langebaan (CML) has been a major component of the Group’s NAV and delivered good growth as Langebaan became a highly desirable holiday and residential location, having benefited from infrastructure development and good economic growth in the region. Following the realisation of the casino, sale of land and the development and sale of Marina Village, the contribution of CML to NAV has reduced from 50% in 2016 to 14% in 2017.

CML contributed a profit for the year of R141.8 million (2016: R20.5 million), largely reflected in the sale of the interest held in the Mykonos Casino and vacant land adjacent to the casino, which realised cash of R220 million. The balance of the profit was earned from rental income and other services, including profits from the sale of the Marina Village development which was completed during the year and fully sold out.

Aria Property Group has focused on improving the quality of the portfolio by purchasing institutional grade assets mostly located in the Western Cape. During the year, Aria concluded the purchase of a R614.1 million portfolio of commercial, retail and industrial properties from Redefine Properties. One of the properties, Pier Place, located in the Cape Town CBD, was purchased vacant for R170 million and was 78% let at the end of the period. Aria contributed R180.8 million (2016: R38.4 million) to Group profit, largely due to improved operations and fair value adjustments.

Generation Education has acquired six school sites of which four will be operating by January 2018. The Sunningdale and Hermanus campuses have been expanded to include a middle school. It achieved a small profit despite employing new teachers and investment in training and preparation for the 2018 school year.

Generation Education commenced operations in January 2016 and the model has already proven to be successful. We are on track to meet our targets of 10 school sites by the end of 2018 and 2 400 pupils within three years through the purchase or development of new schools

– Shapiro

Resi Investment Group has shifted its focus to new-build developments or redevelopments. This has enabled it to continue to perform well, contributing R28.3 million (2016: R12.8 million) to Group profits. Its latest development, through a joint venture in Sanddrift, Western Cape, has been very successful. Resi’s current portfolio comprises over 600 residential units in the Western Cape. Resi has accumulated significant bulk in key nodes which will, in time, be developed into high-density, safe, comfortable and efficient housing units in the high-demand market sector. Resi’s business includes the selective sale of investment units to optimise overall returns.

ASK Partners, a boutique real estate private equity start up based in London, aims to provide innovative structured financing to property developers in the United Kingdom. Trematon invested R72.4 million (GBP4.3 million) in ASK. ASK refinances each transaction via a syndication process whereby 90% of the loan value is syndicated to high net worth individuals and 10% is retained by ASK, this ensures efficient recycling of capital. As the investment was made towards the end of Trematon’s financial year a small net profit of R0.4 million was earned for the period.

We have achieved significant growth during the period and this is in line with the implementation of our strategy to exploit growth and value-adding opportunities.

“Transformative new investments in all the major operating areas have proved successful and we will continue to look for similar opportunities while continuing to enhance our operations