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Audited results for the year ended 30 November 2014
GLOBAL ASSET MANAGEMENT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2002/003192/06)
Share Code: GAM ISIN: ZAE000173498
(“Global” or “the Company” or “the Group”)
AUDITED RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2014
The Board of Directors of Global is pleased to present the audited results of Global and its subsidiaries (“the
Group”) for the year ended 30 November 2014.
Condensed consolidated statement of comprehensive income
Audited Audited re-
presentation
2014 2013
R R
Revenue 185 105 302 177 217 074
Cost of Sales 125 024 573 117 898 319
Gross Profit 60 080 729 59 318 755
Other income 3 241 269 638 868
Operating expenses (21 179 852) (17 494 241)
Income from operations 42 142 146 42 463 382
Investment revenue 7 996 7 217
Earnings from joint venture 280 470 -
Finance costs (26 560 288) (24 407 843)
Profit before taxation 15 870 324 18 062 756
Taxation (4 565 097) (4 811 163)
Profit for the year 11 305 227 13 251 593
Other comprehensive income (798 813) -
Fair value adjustment on disposal group held for sale (981 922) -
Taxation 183 109 -
Total comprehensive income 10 506 414 13 251 593
Total profit attributable to: 11 305 227 13 251 593
Equity holders of the parent 11 305 227 13 251 593
Total comprehensive income attributable to: 10 506 414 13 251 593
Equity holders of the parent 10 506 414 13 251 593
Earnings per share (cents) 24,8 37,6
Condensed consolidated statement of financial position
Audited Audited
2014 2013
R R
ASSETS
Non-current assets 478 830 555 445 493 494
Property, plant and equipment 442 312 977 409 072 068
Intangible asset 1 075 074 1 000 000
Investment in financial asset 2 250 000 -
Investment in joint venture 680 470 -
Loans and advances to customers 12 825 170 16 991 006
Deferred tax asset 19 686 864 18 430 420
Current assets 70 569 339 54 714 439
Loans and advances to customers 7 571 033 5 128 873
Other loans receivable 1 742 313 -
Trade and other receivables 44 876 495 31 175 302
Cash and cash equivalents 16 379 498 18 410 264
Disposal group held for sale - 4 889 030
Total assets 549 399 894 505 096 963
EQUITY AND LIABILITIES
Equity
Ordinary share capital 34 795 085 31 942 487
Reserves 77 272 947 66 766 533
Total equity 112 068 032 98 709 020
Liabilities
Non-current liabilities 282 973 432 275 063 434
Deferred tax liability 55 842 651 50 845 387
Other financial liabilities 227 130 781 224 218 047
Current liabilities 154 358 430 130 564 839
Other loans payable 613 054 1 352 207
Other financial liabilities 101 999 570 86 122 708
Trade and other payables 50 795 207 42 532 159
Taxation 950 599 557 765
Disposal group held for sale - 759 670
Total equity and liabilities 549 399 894 505 096 963
Net asset value per share (cents) 243,4 220,8
Shares in issue at year end 46 046 266 44 699 113
Condensed consolidated statement of changes in equity
Available Common
Share Retained
for sale control Total equity
capital earnings
reserve reserve
R R R R R
Balances at 30 November
2012 4 279 276 798 813 (6 941 028) 59 657 155 57 794 216
Share issued 29 307 959 - - - 29 307 959
Share issue expense (1 644 748) - - - (1 644 748)
Total comprehensive income - - - 13 251 593 13 251 593
Total changes 27 663 211 - - 13 251 593 40 914 804
Balances at 30 November
2013 31 942 487 798 813 (6 941 028) 72 908 748 98 709 020
Share issued 3 098 452 - - - 3 098 452
Share issue expense (245 854) - - - (245 854)
Profit on sale of disposal group - (798 813) - 798 813 -
Total comprehensive income - - - 10 506 414 10 506 414
Total changes 2 852 598 (798 813) - 11 305 227 13 359 012
Balances at 30 November
2014 34 795 085 - (6 941 028) 84 213 975 112 068 032
Condensed consolidated statement of cash flows
Audited Audited re-
presentation
2014 2013
R R
Cash flows from operating activities
Cash generated from operations 124 180 882 128 239 653
Interest income 7 996 7 217
Finance costs (26 560 288) (24 407 843)
Taxation paid (248 334) (407 165)
Net cash from operating activities 97 380 256 103 431 862
Cash flows from investing activities
Cash flow to maintain activities
Property, plant and equipment additions (1 803 289) (11 066 500)
Intangible assets additions (75 074) (1 000 000)
Proceeds on disposal group held for sale 967 455 -
Investment in financial asset (560 000) -
Investment in joint venture (400 000) -
Net cash from investing activities (1 870 908) (12 066 500)
Cash flows used in financing activities
Proceeds from the issue of share capital 2 852 598 27 663 211
Repayments of other financial liabilities (99 772 682) (97 054 065)
Loans receivable (1 742 313) -
Proceeds from (repayment to) holding company 1 122 283 (4 799 048)
Net cash used in financing activities (97 540 114) (74 189 902)
Total cash movement for the year (2 030 766) 17 175 460
Cash at the beginning of the year 18 410 264 1 234 804
Cash at the end of the year 16 379 498 18 410 264
1. BASIS OF PREPARATION
The Board of Directors is pleased to present the Company’s audited results for the year ended
30 November 2014 in accordance with IAS 34: Interim Financial Reporting and the JSE Listings
Requirements. The accounting policies adopted for purposes of this report comply, and have been
consistently applied in all material respects with International Financial Reporting Standards (“IFRS”).
The same accounting policies and methods of computation have been followed as compared to the
prior financial year. The results have been audited by Horwath Leveton Boner. Their unqualified audit
report is available for inspection at the Company’s registered office.
The financial results have been prepared by the financial director, Mr W Basson CA (SA).
2. PROPERTY, PLANT AND EQUIPMENT
Accumulated
Cost depreciation Carrying value
2014 R R R
Forklifts 664 276 723 (222 339 733) 441 936 990
Furniture and Fittings 71 619 (64 493) 7 126
Office equipment 12 000 (6 168) 5 832
IT equipment 328 938 (286 770) 42 168
Computer software 137 987 (127 046) 10 941
Tank containers 1 051 750 (741 830) 309 920
Total 665 879 017 (223 566 040) 442 312 977
Accumulated
Cost depreciation Carrying value
2013 R R R
Forklifts 578 388 343 (169 769 798) 408 618 545
Furniture and Fittings 69 188 (55 789) 13 399
Office equipment 12 000 (4 168) 7 832
IT equipment 310 472 (244 939) 65 533
Computer software 125 207 (120 957) 4 250
Tank containers 1 051 750 (689 241) 362 509
579 956 960 (170 884 892) 409 072 068
Carrying amounts of Property, plant and equipment can be reconciled as follows:
Carrying Carrying
value Transfers to value
opening trading closing
balance Additions Impairment operations Depreciation balance
2014 R R R R R R
Forklifts 408 618 545 119 895 562 (4 072 463) (21 707 485) (60 797 169) 441 936 990
Furniture and
Fittings 13 399 2 430 - - (8 703) 7 126
Office
equipment 7 832 - - - (2 000) 5 832
IT equipment 65 533 18 466 - - (41 831) 42 168
Computer
software 4 250 12 786 - - (6 095) 10 941
Tank
containers 362 509 - - - (52 589) 309 920
409 072 068 119 929 244 (4 072 463) (21 707 485) (60 908 387) 442 312 977
Carrying Carrying
value Transfers to value
opening trading closing
balance Additions Impairment operations Depreciation balance
2013 R R R R R R
Forklifts 377 821 770 120 912 182 (3 878 960) (35 874 322) (50 362 125) 408 618 545
Furniture and
Fittings 24 327 - - - (10 928) 13 399
Office
equipment 9 838 - - - (2 006) 7 832
IT equipment 92 433 32 156 - - (59 056) 65 533
Computer
software 6 352 5 113 - - (7 215) 4 250
Tank
containers 415 095 - - - (52 586) 362 509
378 369 815 120 949 451 (3 878 960) (35 874 322) (50 493 916) 409 072 068
3. SHARE CAPITAL
2014 2013
R R
Authorised:
1 000 000 000 ordinary shares at no par value - -
1 000 000 000 Class A (fixed rate), 1 000 000 000 Class B (zero
rate), 1 000 000 000 Class C (variable rate), five year, redeemable,
convertible, non-voting, non-participating preference shares at no
par value - -
953 953 734 (2013: 955 300 887) unissued ordinary shares are under the control of the directors in
terms of the latest annual general meeting.
2014 2013
R R
Issued:
Opening balance 31 942 487 4 279 276
Issued 2 852 598 27 663 211
Closing balance 34 795 085 31 942 487
Issued share capital consists of 46 046 266 (2013: 44 699 113) Ordinary share at no par value.
4. RE-PRESENTATION
Previously
reported Reclassification Re-presentation
2013 R R R
Cashflow statement:
Cash generated from operations 92 365 331 35 874 322 128 239 653
Property plant and equipment disposals 35 874 322 (35 874 322) -
In terms of IAS 7, the disposal of property plant and equipment are normally cash flows from investing
activities. Cash receipts from subsequent sale of such assets are cashflows from operating activities.
Management have concluded that a more appropriate presentation would therefore be to show the
cashflows under operating activities.
Previously reported Reclassification Re-presentation
2013 R R R
Statement of comprehensive
income:
Cost of sales 112 497 611 5 400 708 117 898 319
Operating expenses 22 894 949 (5 400 708) 17 494 241
Refurbishment costs are incurred as part of the disposal transaction. Previously these costs were
accounted for as operating expenses. In order to reflect the disposal transaction these costs has been
reclassified as part of the cost of the transaction.
5. EARNINGS PER SHARE (CENTS)
The calculation of the earnings per ordinary share is based on the profit attributable to ordinary
shareholders of R11 305 227 (2013: R13 251 593) and a weighted average number of ordinary shares
outstanding of 45 606 699 (2013: 35 220 790) for the year.
The calculation for the headline earnings per ordinary share is based on the headline profit attributable
to ordinary shareholders of R13 438 588 (2013: R16 044 444) and a weighted average number of
ordinary shares outstanding of 45 606 699 (2013: 35 220 790) for the year.
Reconciliation between earnings per share and headline earnings per share:
Total
2014 R
Earnings 11 305 227
Adjusted for:
Impairment on used forklift trucks (net of taxation) 2 932 174
Proceeds on the sale of the disposal group held for sale (net of
taxation) (798 813)
Headline earnings 13 438 588
Total
2013 R
Earnings 13 251 593
Adjusted for:
Impairment on used forklift trucks (net of taxation) 2 792 851
Headline earnings 16 044 444
Weighted average number of ordinary shares
2014 2013
Weighted average number of ordinary shares 45 606 699 35 220 790
Earnings per share
2014 2013
Earnings per share (cents) 24.8 37.6
There are no instruments in issue that would cause a dilutive effect.
Headline earnings per share
2014 2013
Headline earnings per share (cents) 29.5 45.5
There are no instruments in issue that would cause a dilutive effect.
6. BUSINESS OVERVIEW
Global derived its profits mainly from its wholly owned subsidiary LFS Assets Proprietary Limited
(“LFS”). LFS’s performance met expectations for the 30 November 2014 financial year.
Global continued the development of its renewable energy businesses during 2014. Diversifying into
high yielding and cashflow producing businesses remains the cornerstone of the longer term strategy
of Global. Approximately R5 million was spent on operational expenditure and working capital for the
development of the waste to energy portfolio, specifically focussing on the conclusion of the Plastic
Green Energy transaction. Together with Futuregrowth Asset Management Proprietary Limited
(“Futuregrowth”), a member of the Old Mutual Investment Group (OMIGSA), it was agreed to co-fund
the first plastic-to-oil plant in Springs. The transaction is scheduled to be finalised by March 2015.
Global has also indicated that it will exercise its option obtained after the financial year end to
purchase 51% of Earthwise Energy Holdings Proprietary Limited (“EWEH”) to ensure control over the
waste to energy businesses. A pre-approval funding letter, subject to certain conditions precedent,
was received to the value of R600 million to facilitate the roll-out of the waste to energy businesses.
Shareholders of Global were advised on 27 August 2014 that GAM New Energy Proprietary Limited
(“GAM New Energy”), a wholly owned subsidiary of Global, acquired 500 ordinary shares (50%) in
Energon SA Proprietary Limited from a fellow subsidiary, Inshare Asset Finance Green Technologies
Proprietary Limited (“IAFGT”). The acquisition consideration was R400 000. In terms of the JSE
Listings Requirements, the transaction was deemed to be a related party as IAFGT is a subsidiary of
the holding company of Global but due to the size of the transaction did not require a fairness opinion
or shareholder approval.
7. FINANCIAL RESULTS
Revenue increased due to an increase in rentals of forklift trucks from R114.2 million in 2013 to
R121,6 million in 2014. Cost of sales increased in line with the increase in revenue.
The increase in operating expenses was due to the increase in salary and consulting costs of
approximately R3 million. These expenses were incurred in GAM New Energy to establish the waste
to energy businesses, which are expected to generate attractive revenues in the future.
It should be noted that the current portion of other financial liabilities reflected in the statement of
financial position represents a 12 month portion of funding from various financial institutions
associated with the Group’s rental book. Trade and other receivables only reflect approximately one
month of receivables arising from the matching rental contracts. The net current liability position of the
Group is thus considered to be sound as current liabilities will be settled by ongoing monthly rental
billings.
Performance Highlights for 2014
Global has delivered satisfactory results, considering the difficult business environment. Key
achievements include:
- Total Assets growing by 8.8% to R549,4 million, with Total Equity growing by 13.5% to R112,0
million;
- Issuing 1 347 153 new ordinary shares, raising R3 098 452 in equity before share issue
expenses;
- Establishing GAM New Energy, Total Rubber Recycling Proprietary Limited, which is a
subsidiary of GAM New Energy, and the Energy Efficiency Company Proprietary Limited
(“Energy Efficiency Company”).
- Entering into a subscription agreement subsequent to the financial year end with Insure Group
Managers Limited for an amount of R15 million at an issue price of 230 cents per share;
GAM New Energy is a subsidiary and operating company of the Global Group with a strategic focus
on investments into waste to energy projects, including plastic-to-oil and rubber-to-oil pyrolysis
projects.
The Energy Efficiency Company focusses on providing funding to corporates for the installation of
energy efficiency equipment in order to enhance old electrical infrastructure.
Performance of the Global Group
Global has used its significant asset finance business, LFS Assets Proprietary Limited (“LFS”), as a
base to grow from, focussing on opportunities in the renewable energy sector through its GAM New
Energy subsidiary. LFS, Global’s main operating subsidiary, was the main contributor to profits.
Global achieved a profit for 2014 of R11.3 million, in spite of costs incurred in establishing its newly
founded subsidiaries GAM New Energy, Total Rubber Recycling, a subsidiary of GAM New Energy,
and the Energy Efficiency Company.
The results of LFS were negatively impacted as the prices realised on the sale of second-hand trucks
remained below expectations.
Property, plant and equipment in the Statement of Financial Position increased by 8.1%, primarily as a
result of additional forklift trucks being acquired for the rental book during the year.
8. SEGMENTAL REPORTING
Segmental information has been reported by the Group in the following segments, namely forklift truck
rentals, forklift truck maintenance and other income.
Rental Maintenance Other income Total
income income
2014 R R R R
Sales 121 607 404 43 595 679 19 902 219 185 105 302
Cost of sales (60 797 169) (42 337 919) (21 889 485) (125 024 573)
Gross profit 60 810 235 1 257 760 (1 987 266) 60 080 729
Operating expenses, finance
costs and other income (37 055 694) - (7 154 711) (44 210 405)
Taxation (6 507 731) (352 173) 2 294 807 (4 565 097)
Profit after tax 17 246 810 905 587 (6 847 170) 11 305 227
Depreciation and impairment (64 869 632) - (111 218) (64 980 850)
Additional information
Segment assets 524 981 967 - 24 417 927 549 399 894
Additions to property plant
and equipment 119 895 562 - 33 682 119 929 244
Deferred tax asset 18 765 667 - 921 197 19 686 864
Deferred tax liability (55 351 516) - (491 136) (55 842 652)
Segment liability (424 413 454) - (12 918 408) (437 331 862)
Rental Maintenance Other income Total
income income
2013 R R R R
Sales 114 279 756 43 912 101 19 025 217 177 217 074
Cost of sales (55 762 835) (43 904 072) (18 231 412) (117 898 319)
Gross profit 58 516 921 8 029 793 805 59 318 755
Operating expenses, finance
costs and other income (35 608 673) - (5 647 326) (41 255 999)
Taxation (6 643 278) (2 248) 1 834 363 (4 811 163)
Profit after tax 16 264 970 5 781 (3 019 158) 13 251 593
Depreciation and impairment (52 921 792) - (1 451 084) (54 372 876)
Additional information
Segment assets 427 955 736 - 77 141 227 505 096 963
Additions to property plant
and equipment 120 912 182 - 37 269 120 949 451
Deferred tax asset 18 430 420 - - 18 430 420
Deferred tax liability (43 044 686) - (7 800 701) (50 845 387)
Segment liability (395 046 861) - (11 341 082) (406 387 943)
Reconciliation between previously reported and re-presentation figures:
Previously
reported Reclassification Re-presentation
2013 - Rental income R R R
Statement of comprehensive income:
Cost of sales 50 362 127 5 400 708 55 762 835
Operating expenses, finance costs and other
income 41 009 381 (5 400 708) 35 608 673
9. DIRECTORS
During the year under review, the Board of Directors was constituted as follows:
Name Date of appointment Position/title
Niels Penzhorn 1 December 2009 Chief Executive Officer
Werner Petrus Basson 14 November 2012 Chief Financial Officer
Marinus Cornelis Christoffel 13 February 2002 Chief Operating Officer
(“Koos”) van Ettinger
Alan Jerome Naidoo 1 November 2012 Non-Executive Director
Andrew Alexander Maren* 1 November 2012 Non-Executive Director
Gabriel Thono Magomola 1 November 2012 Independent Non-Executive Director
Gordon Kenneth Cunliffe 1 November 2012 Independent Non-Executive Director and
Chairman
*As at 30 June 2014, Mr Andrew Alexander Maren resigned from the Board of Directors.
10. SHARE CAPITAL/ REPURCHASE OF SHARES
The Company has raised R3 098 452 in cash before share issue expenses through the issue of 1 347
153 ordinary shares for cash at 230 cents per ordinary share. The issue of 1 347 153 shares is under
the general authority to issue shares cash.
Applications for the listing of these shares on the Johannesburg Stock Exchange (“JSE”) were made
and the shares were listed during the financial year respectively.
On 10 November 2014, the Company announced an intention to issue an additional 10 869 565
ordinary shares at no par value under the general authority for a minimum subscription price of 230
cents per share. It was further announced that the Company intends to proceed with a claw-back offer
to raise R15 million by issuing 6 521 739 ordinary shares with a subscription price of 230 cents. The
claw back subscription is expected to be concluded in due course and thereafter the claw back offer to
shareholders will be finalised and a road show to potential investors for the placing of additional
shares will commence.
During the year under review, the Company did not repurchase any shares.
11. DIVIDEND
The Company has not declared a dividend for the year ended 30 November 2014 (2013: R Nil).
12. LITIGATION
There is no litigation pending against the Company or its Subsidiaries, which is expected to have a
material impact on the results of the Group.
13. CONTINGENT LIABILITIES
At the financial year end the Group did not have any contingent liabilities (2013: R Nil).
14. COMMITTMENTS
Software is in the process of being developed. The commitment at 30 November 2014 was R 424 926
(2013: R 500 000).
15. SUBSEQUENT EVENTS
The Terms of the Claw-back Offer
In pursuance of the capitalisation strategy and the equitable treatment of current shareholders, the
Company has entered into a subscription agreement subsequent to the financial year end with Insure
for an amount of R15 million at an issue price of 230 cents per share. The Claw-back offer will give
current shareholders the opportunity to claw-back their shareholding by subscribing for the shares
held by Insure in the ratio of 14.25769 Claw-Back Shares for every 100 Global shares held at the
record date, which date is to be announced in due course.
Exercise of the EWEH option
Shareholders are advised that the Group was granted an option subsequent to the financial year end,
which the Group intends to exercise through its subsidiary GAM New Energy, to take up a further 20%
in EWEH for an amount of R20 million by way of a subscription for new shares in EWEH. This will take
GAM New Energy stake in EWEH to 24% on a diluted basis. Shareholders are advised that
negotiations are underway to take the GAM New Energy stake in EWEH to 51% and hence to become
the controlling shareholder of EWEH.
The proceeds from the option exercised will be for the sole purpose of funding the roll out of the first
plastic waste to oil conversion factory, to be established in Springs. The first factory is to be co-funded
together with Futuregrowth.
The construction and engineering works are to commence during the first quarter of 2015.
16. FUTURE PROSPECTS
The Global Group will continue to build on its formidable platform of assets and skills, linking financial
management prowess and structuring expertise within Global and its partner companies, to become
the investment vehicle and financing partner of choice for investors, business owners and clients.
Being listed on the JSE provides Global with an enhanced standing and visibility in the market,
allowing the company to access an increased set of funding options.
The following strategic objectives will be pursued in 2015:
- Executing the Plastic Green Energy transaction together with Futuregrowth through EWEH and
commencing with the construction of the first plastic-to-oil plant in Springs;
- Finalising the capital raising activities and securing an additional R40 million of fresh capital by
issuing shares;
- Concluding all supply and off-take agreements within the waste-to-energy business to be able
to tap into the pre-approval funding letter received;
- Focussing on adding cash generating businesses into the renewable energy business cluster;
and
- Diversifying geographically through the roll-out of its waste to energy technologies into Southern
Africa.
By order of the Board
G.K Cunliffe N. Penzhorn
Chairman Chief Executive Officer
Johannesburg
05 March 2015
Registered Office
Ruimsig Country Office Park
Block E, 129 Hole in One Avenue
Ruimsig North
Roodepoort, 1724
Directors
G.K Cunliffe*; M.C.C van Ettinger; N. Penzhorn; W.P Basson; G.T Magomola*; A.J Naidoo*
* - independent non-executive
Designated Advisor Transfer Office
Arbor Capital Sponsors Proprietary Limited Link Market Services Proprietary Limited
Date: 05/03/2015 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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