Wrap Text
Unaudited interim results for the six months ended 31 May 2015
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”)
UNAUDITED RESULTS FOR THE SIX MONTH PERIOD ENDED 31 MAY 2015
The Board of Directors of Global are pleased to present the unaudited results of Global and its
Subsidiaries (“the Group”) for the six month period ended 31 May 2015.
Condensed statement of comprehensive income
6 months 12 months 6 months
Unaudited Audited Restated
31 May 30 November 31 May
2015 2014 2014
R’000 R’000 R’000
Revenue 93 828 185 105 89 530
Cost of sales (63 761) (125 024) (60 374)
Gross profit 30 067 60 081 29 156
Other income 173 3 241 33
Operating expenses (10 582) (21 180) (8 306)
Operating profit before interest 19 658 42 142 20 883
Interest received 72 8 32
Earnings from joint venture - 280 -
Finance costs (13 986) (26 560) (12 460)
Profit before taxation 5 744 15 870 8 455
Taxation (1 637) (4 565) (2 448)
Profit for the year 4 107 11 305 6 007
Other comprehensive income - (799) -
Disposal group held for sale - (982) -
Taxation - 183 -
Total comprehensive Income 4 107 10 506 6 007
Total profit attributable to:
Parent 4 107 11 305 6 331
Minority - - (324)
Total comprehensive income attributable to:
Parent 4 107 10 506 6 331
Minority - - (324)
Headline earnings reconciliation:
Attributable earnings 4 107 11 305 6 007
Impairment (Net of Taxation) 361 2 133 -
Headline earnings 4 468 13 438 6 007
Per share information:
Headline earnings per share (cents) 9.7 29.5 13.2
Basic earnings per share (cents) 8.9 24.8 13.2
Weighted average number of shares in issue 46 046 266 45 606 699 45 351 166
Condensed consolidated statement of financial position
Unaudited Audited Unaudited
31 May 30 November 31 May
2015 2014 2014
R’000 R’000 R’000
Assets
Non-current assets 461 230 478 830 471 951
Property, plant and equipment 446 665 442 313 432 387
Intangible asset 1 075 1 075 1 000
Investment in financial asset 2 250 2 250 560
Investment in joint venture - 680 -
Loans and advances to customers 10 270 12 825 16 943
Deferred tax 970 19 687 21 061
Current assets 67 735 70 569 59 985
Loans and advances to customers 6 624 7 571 5 855
Other loan receivable 938 1 742 467
Trade and other receivables 45 289 44 876 35 451
Cash and cash equivalents 14 884 16 380 18 212
Disposal group held for sale - - 4 889
Total assets 528 965 549 399 536 825
Equity and liabilities
Equity 116 175 112 068 107 262
Share capital 34 795 34 795 34 141
Retained earnings 81 380 77 273 73 121
Liabilities
Non-current liabilities 250 594 282 974 285 911
Other financial liabilities 212 020 227 131 230 086
Deferred tax 38 574 55 843 55 825
Current liabilities 162 196 154 357 142 910
Loan from holding company - 613 3 017
Other financial liabilities 122 453 101 999 88 951
Current tax payable 342 950 827
Trade and other payables 39 401 50 795 50 115
Disposal group held for sale - - 742
Total equity and liabilities 528 965 549 399 536 825
Per share information
Net asset value per share (cents per share) 252.3 243.4 234.9
Number of shares in issue at period end 46 046 266 46 046 266 45 654 961
Condensed consolidated statement of cash flows
Unaudited Audited Restated
31 May 30 November 31 May
2015 2014 2014
R’000 R’000 R’000
Cash generated from operating activities 38 752 97 380 48 024
Cash generated from/(used in) investing 300 (1 870) 3 278
activities
Cash used in financing activities (40 548) (97 540) (51 500)
Total cash movement for the year (1 496) (2 030) (198)
Cash at the beginning of the year 16 380 18 410 18 410
Total cash at end of the year 14 884 16 380 18 212
Condensed consolidated statement of changes in equity
Available Common Attributable
Share for sale Control Retained to equity
capital reserve reserve income holders Total equity
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 30
November 2013 31 942 799 (6 941) 72 909 98 709 98 709
Share issue 3 098 - - - 3 098 3 098
Share issue
expense (245) - - - (245) (245)
Profit on sale of
disposal group - (799) - 799 - -
Total
comprehensive
income - - - 10 506 10 506 10 506
Total changes 2 853 (799) - 11 305 13 359 13 359
Balance at 30
November 2014 34 795 - (6 941) 84 214 112 068 112 068
Share issue - - - - -
Total
comprehensive
income - - 4 107 4 107 4 107
Total changes - - - 4 107 4 107 4 107
Balance at 31
May 2015 34 795 - (6 941) 88 321 116 175 116 175
1. BASIS OF PREPARATION
The board of directors is pleased to present the Group’s unaudited results for the six month
period ended 31 May 2015. 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 abridged financial statements have been
prepared in accordance with the requirements of IAS 34 (Interim Financial Reporting). The
results are presented in Rand and the going concern principal has been adopted in the
preparation of the results.
The same accounting policies and methods of computation have been followed as compared
to the prior audited period namely 30 November 2014 as detailed in the results announcement
published on SENS on 3 March 2015.
The financial results have been prepared by the financial director, Mr W Basson CA (SA) in
accordance with the JSE Limited Listings Requirements.
2. INDUSTRY AND BUSINESS OVERVIEW
Since listing in 2012, Global has used its significant asset finance business, LFS Assets, as a
base to grow from, by focusing on opportunities in the renewable energy sector through its
GAM New Energy Proprietary Ltd (“GAM New Energy”) subsidiary.
The business model for GAM New Energy is simple: utilising renewable, abundant resources,
mainly from the sun and waste. The company endeavours to significantly contribute to the
alleviation of energy scarcity, whilst at the same time addressing the waste management
conundrum and environmental concerns in South Africa. The universal nature of the waste
and energy problem, as well as the proprietary technology applied, makes the GAM New
Energy business concept highly exportable.
Global is on track to become the leader in waste-to-energy solutions in South Africa, focusing
on hydrocarbon waste streams, namely plastic and rubber. To this end GAM New Energy is
preparing to construct its first waste plastic plant in Springs, housed within Plastic Green
Energy Proprietary Ltd (“PGE”), using proprietary technology to recover the latent energy
inherent in waste plastic and converting it into liquid fuel, aimed at the industrial fuel oils
market and a number of co-products and/or high value derivatives. As previously announced,
Futuregrowth Asset Management (Pty) Ltd has agreed to acquire 45% of PGE and will also
advance senior debt towards the business during subsequent expansion phases.
GAM New Energy is also in the process of launching its first pyrolysis plant through its newly
founded subsidiary Enviroprotek (Pty) Ltd which is aimed at converting waste rubber into
industrial fuel oil, carbon black and steel, with a projected commencement during the 3rd
quarter of 2015. The Company has also secured proprietary technology out of the US, for the
same purpose. The technology is ready for commercialisation and the business venture is
projected to commence during the first half of 2016.
Furthermore, GAM New Energy is busy launching its first small scale commercial
concentrated solar power plant for commissioning in the second quarter of 2016.
3. FINANCIAL RESULTS
Global reports that the profit performance of the Group is marginally below expectation in
comparison to the budgeted profit performance of the Group.
The main business of the Group has continued to grow with new rental contracts being signed
during the year. Cost of sales increased due to a more aggressive depreciation policy being
applied on the second hand forklift trucks.
The roll out of various initiatives resulted in increased operating expenses which restricted the
current growth experienced by the Group.
Since November 2014, property, plant and equipment on the statement of financial
performance increased marginally by 1.0%, due to the additional forklift trucks being acquired
for the primary rental book being nullified by the increase in sales of second hand forklift trucks
during the period under review.
The investment in the joint venture was disposed of during the period ended 31 May 2015.
There were no additions during the six month period ended 31 May 2015 to loan and
advances to customers.
Other financial liabilities including trade and other payables have increased marginally
compared to the same period last year. The increase was nullified by the repayment of
residual values on forklift trucks.
The roll out of new initiatives reduced earnings and headline earnings per share for the six
month period. The projects into which the additional funds are invested are still at an early
stage and profits in relation to the new projects will only start flowing through over the next
twelve months.
It should be noted that the current portion of other financial liabilities reflected on the balance
sheet represents a 12 month accrual for finance associated with the Group’s rental book. On
the other side, 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.
4. RE-PRESENTATION
The comparative interim results have been re-presented in line with the 30 November 2014
year end results.
Reconciliation between previously reported and re-presentation figures:
Previously Re- Re-
GROUP reported classification presentation
May 2014 R’000 R’000 R’000
Cash flow statement
Cash generated from
operations 39 501 8 523 48 024
Property plant and
equipment disposals 8 523 (8 523) -
Interims 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 cash flows from
operating activities.
Management have concluded that a more appropriate presentation would therefore be to show
the cash flows under operating activities.
Reconciliation between previously reported and re-presentation figures:
Previously Re- Re-
GROUP reported classification presentation
May 2014 R’000 R’000 R’000
Statement of
comprehensive income
Cost of sales 57 215 3 159 60 374
Operating expenses 11 465 (3 159) 8 306
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 have been reclassified as part of the cost of the transaction.
5. SEGMENTAL REPORTING
Segmental information has been reported by the Group in the following segments, namely
forklift truck rentals and fork truck maintenance transactions.
Rental Maintenance Other
GROUP income income income Consolidation
May 2015 R’000 R’000 R’000 R’000
Sales 58 158 20 367 15 303 93 828
Cost of sales (31 138) (20 606) (12 017) (63 761)
Gross profit 27 020 (239) 3 286 30 067
Operating expense (19 003) - (5 320) (24 323)
Taxation (2 245) 67 541 (1 637)
Profit after tax 5 772 (172) (1 493) 4 107
Depreciation and
impairment (32 648) - (24) (32 672)
Additional information
Segment assets 507 696 - 21 269 528 965
Additions to property
plant and equipment 44 918 - 1 500 46 418
Deferred tax asset - - 970 970
Deferred tax liability (38 574) - - (38 574)
Segment liability (403 581) - (9 209) (412 790)
Rental income Maintenance Other
GROUP R’000 income income Consolidation
May 2014 R’000 R’000 R’000
Sales 60 880 20 960 7 690 89 530
Cost of sales (30 857) (21 137) (8 380) (60 374)
Gross profit 30 023 (177) (690) 29 156
Operating expense (17 464) - (3 237) (20 701)
Taxation (3 597) 50 1 099 (2 448)
Profit after tax 8 962 (127) (2 828) 6 007
Depreciation and
impairment (28 050) - (111) (28 161)
Additional information
Segment assets 445 458 - 91 367 536 825
Additions to property
plant and equipment 60 186 - - 60 186
Deferred tax assets 20 714 - 347 21 061
Deferred tax liability (48 016) - (7 809) (55 825)
Segment liability (416 613) - (12 950) (429 563)
Project management, corporate services and any other income is below the quantitative
threshold set by IFRS for reporting.
6. RELATED PARTY TRANSACTIONS
Relationships:
Holding company: Inshare (Pty) Ltd
Fellow subsidiaries: LFS Assets (Pty) Ltd
Energy Efficiency Company (Pty) Ltd
GAM New Energy (Pty) Ltd
Total Rubber Recycle (Pty) Ltd
Inshare Asset Finance Holdings (Pty) Ltd
Ocean Crest Trading 11 (Pty) Ltd
E B M Project (Pty) Ltd
Dalton Sugar Company (Pty) Ltd
Inshare Properties (Pty) Ltd
Joint venture: Energon SA (Pty) Ltd
Investment: Earthwise Energy Holdings (Pty) ltd
Related party transactions were as follows:
GROUP GROUP
MAY 2015 MAY 2014
R’000 R’000
Related party balances
Loan account owing (to) by related
parties
Inshare (Pty) Ltd - (3 017)
Energon SA (Pty) Ltd 438 1 546
The loans are unsecured, bear interest and
are payable on demand. There was no
evidence of impairment for the period end 31
May 2015, thus the fair value approximates
the carrying value at cost.
Earthwise Energy Holdings (Pty)Ltd 196 -
The loan is unsecured, bears no interest and
is payable on demand. There was no
evidence of impairment for the period end 31
May 2015, thus the fair value approximates
the carrying value at cost.
Related party transactions are at arm’s
length
Loan received from (repay/advanced to)
Inshare (Pty) Ltd (613) 1 665
Rent paid to (received from) related parties
Ocean Crest Trading 11 (Pty) Ltd 439 399
Management fee paid to (received from)
Inshare (Pty) Ltd 420 420
Inshare Asset Finance Holdings (Pty) Ltd 742 318
Energon SA (Pty) Ltd (85) -
Dalton Sugar Company (Pty) Ltd (150) -
Energy Efficiency Company (Pty) Ltd (150) -
Purchase of investment in other financial assets
Inshare Asset Finance Green Technologies (Pty) Ltd - 400
Consulting fee paid to (received by)
E B M Project (Pty) Ltd (1 500) (1 500)
7. BOARD OF DIRECTORS
The current board is constituted as follows:
Name (Age) Date of appointment Position/title
Niels Penzhorn (41) 1 December 2009 Chief Executive Officer
Werner Petrus Basson (32) 14 November 2012 Chief Financial Officer
Marinus Cornelis Christoffel 13 February 2002 Chief Operating Officer
van Ettinger (66)
Alan Jerome Naidoo (36) 1 November 2012 Non-Executive Director
Gabriel Thono Magomola (70) 1 November 2012 Lead Independent Non-
Executive Director
Gordon Kenneth Cunliffe (65) 1 November 2012 Non-Executive Chairman
There have been no changes to the board of directors in the period under review other than
the re-appointment of Gordon Kenneth Cunliffe and Alan Jerome Naidoo as non-executive
directors.
8. SHARE CAPITAL AND ISSUE/REPURCHASE OF SHARES
During the period presented, the Company did not issue new shares.
The company intends raising further capital to grow its renewable energy and energy
efficiency businesses and thus intends placing an additional 15,5 million shares over a period
of time as well as undertaking a claw back subscription at R2.30 for 6,5 million shares, which
shares will be subscribed for by the controlling shareholder of Global, namely Insure Group
Managers Ltd and will be offered to existing shareholders on a pro rata basis by way of a claw
back offer at R2.30. Further details will be announced in due course.
Global did not repurchase any shares during the period under review.
9. DIVIDEND
The Company has not declared a dividend for the interim period ended 31 May 2015 (2014: R
Nil).
10. 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.
11. CONTINGENT LIABILITIES
At the balance sheet date the Group does not have any contingent liabilities (2014: R Nil).
12. SUBSEQUENT EVENTS
Global has secured a firm letter of intent from Futuregrowth to act as an investment partner for
its newly formed subsidiary, PGE will house the plastic conversion plant (“the Project”).
Futuregrowth, a member of Old Mutual Investment Group, has agreed to acquire a 45%
interest for R20.25 million in the Project, of which R12 million will be invested in the first
reactor and R8.25 million for another three reactors.
Futuregrowth’s equity investment is subject to a list of agreed conditions precedent, which
PGE is scheduled to have complied with by the end of July 2015. During this period,
Futuregrowth has been granted exclusivity on the transaction.
In addition, the company will be exercising its option to increase its shareholding in Earthwize
from 5% to 51% in due course, as previously announced.
GAM New Energy is in the process of launching its first pyrolysis plant through its newly
formed subsidiary Enviroprotek (Pty) Ltd which is aimed at converting waste rubber into
industrial fuel oil, carbon black and steel with a projected commencement during the 3rd
quarter of 2015.
The Company is also launching its first small scale commercial concentrated solar power plant
during for commissioning 1rst quarter of 2016.
There are no other major events subsequent to 31 May 2015 that require disclosure.
13. FUTURE PROSPECTS
The directors of the Company believe that the Group has excellent prospects to expand its
operations over the near term. Based on its current pipeline of projects and initiatives and
strong management skills, coupled with an excellent reputation and proven track record, it is
expected that Global will generate solid returns for its shareholders.
By order of the Board
GK Cunliffe N Penzhorn
Chairman Chief Executive Officer
Johannesburg
28 July 2015
Registered Office
Ruimsig Country Office Park
Block E
129 Hole in One Avenue
Ruimsig
Roodepoort
1724
Directors
G.K. Cunliffe*; M.C.C van Ettinger; N. Penzhorn; W.P Basson; G.T Magomola*#;
A.J Naidoo*#
* - non-executive
# - independent
Designated Advisor Transfer Office
Arbor Capital Sponsors Proprietary Limited Link Market Services Proprietary Limited
Date: 28/07/2015 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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