JOHANNESBURG - JSE-listed investment holding company Trematon Capital declined by 5.3percent to R2.85 a share on Friday, after it said that headline earnings a share would decrease by approximately 150percent in the half-year to February.
In a disappointing trading update for the six months to end February released on Friday, the group also said that its earnings per share would plummet by about 85percent as the disposal of its Mykonos Casino weighed heavily on the balance sheet.
The share price declined to R2.85 a unit, down from Thursday’s closing price of R3.02.
However, it recovered to closed at R3 a share at the end of the day.
“Earnings are expected to be approximately 7.1cents a share, and a headline loss of approximately 0.9c a share, compared to earnings of 46.4c and headline earnings of 1.8c for the previous interim period,” the group said.
Decline
Trematon said the decline in earnings was mainly a result of the disposal of the company’s interest in the Mykonos Casino in the prior interim period, which had resulted in a large, once-off profit of R91.8million.
Trematon disposed of Mykonos for R190m in November 2016, and the group said that the casino had proven to be an excellent investment for Trematon, but it was not managed by the group.
Trematon invests in assets and businesses which management believes are undervalued and have the potential to achieve targeted internal rates of return.
The group said the decrease in headline earnings was mainly due to expenses related to the take-on and refurbishment of properties which were vacant during the period, as well as increased school costs in preparation of the expansion of its current schools.
Net asset value
Despite the decline in earnings, the group expects its intrinsic net asset value (INAV) to increase during the period.
“The INAV, which the directors consider to be the most important measure of shareholder value, is expected to increase by approximately 24percent to 446c a share from 361c,” the group said.
The increase in the INAV was mainly due to the sale of mature properties within the Resi Investment Group and development sales at Club Mykonos Langebaan, both of which realised values in excess of the director’s valuations, as well as fair value adjustments on some of the remaining properties and investments.
The improvement is also expected in the group’s book net asset value, which is expected to increase by approximately 30percent to 389c a share from 299c as compared to the previous interim period.
Trematon’s interim results will be published on or about April 23.