Wrap Text
Results announcement
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 2015
The Board of Directors of Global (“Board”) is pleased to present the audited results of Global and its
subsidiaries for the year ended 30 November 2015.
Condensed consolidated statement of comprehensive income
Audited Audited
2015 2014
Note R R
Revenue 204 514 110 185 105 302
Cost of Sales 147 255 250 125 024 573
Gross Profit 57 258 860 60 080 729
Other income 410 815 3 241 269
Operating expenses (19 275 503) (21 179 852)
Income from operations 38 394 172 42 142 146
Investment income 323 582 7 996
Earnings from joint venture - 280 470
Finance costs (29 505 016) (26 560 288)
Profit before taxation 9 212 738 15 870 324
Taxation (2 428 212) (4 565 097)
Profit for the year 6 784 526 11 305 227
Other comprehensive income - (798 813)
Reclassification adjustment on the disposal of available - (981 922)
for sale investments
Taxation - 183 109
Total comprehensive income 6 784 526 10 506 414
Total profit attributable to equity holders of the 6 784 526 11 305 227
parent
Total comprehensive income attributable to equity 6 784 526 10 506 414
holders of the parent
Earnings per share (cents) 5 14.7 24.8
Condensed consolidated statement of financial position
Audited Audited
2015 2014
Notes R R
ASSETS
Non-current assets 457 031 448 478 830 555
Property, plant and equipment 2 439 970 378 442 312 977
Intangible asset 1 075 074 1 075 074
Investment in financial asset 3 2 250 000 2 250 000
Investment in joint venture - 680 470
Investment in associate 49 -
Loans and advances to customers 12 082 221 12 825 170
Deferred tax asset 1 653 726 19 686 864
Current assets 67 217 432 70 569 339
Other loans receivable 470 468 1 742 313
Trade and other receivables 55 037 346 52 447 528
Cash and cash equivalents 11 673 217 16 379 498
Inventory 36 401 -
Total assets 524 248 880 549 399 894
EQUITY AND LIABILITIES
Equity
Ordinary share capital 4 34 795 085 34 795 085
Reserves 84 057 473 77 272 947
Total equity 118 852 558 112 068 032
Liabilities
Non-current liabilities 280 111 805 282 973 432
Deferred tax liability 40 179 511 55 842 651
Other financial liabilities 239 932 294 227 130 781
Current liabilities 125 284 517 154 358 430
Other loan payable 251 841 613 054
Other financial liabilities 95 966 981 101 999 570
Trade and other payables 28 873 013 50 795 207
Taxation 192 682 950 599
Total equity and liabilities 524 248 880 549 399 894
Net asset value per share (cents) 258.1 243.4
Shares in issue at year end 46 046 266 46 046 266
Condensed consolidated statement of changes in equity
Common
Share Available for control Retained
capital sale reserve reserve earnings Total equity
R R R R R
Balances at 30 November
2013 31 942 487 798 813 (6 941 028) 72 908 748 98 709 020
Shares issued 3 098 452 - - - 3 098 452
Share issue expense (245 854) - - - (245 854)
Reclassification on disposal of
- (798 813) - 798 813 -
available for sale investments
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
Total comprehensive income - - - 6 784 526 6 784 526
Total changes - - - 6 784 526 6 784 526
Balances at 30 November
2015 34 795 085 - (6 941 028) 90 998 501 118 852 558
Condensed consolidated statement of cash flows
Audited Audited
2015 2014
R R
Cash flows from operating activities
Cash generated from operations 120 654 531 124 180 882
Interest income 323 582 7 996
Finance costs (29 505 016) (26 560 288)
Taxation 1 085 066 (248 334)
Net cash from operating activities 92 558 163 97 380 256
Cash flows from investing activities
Cash flow to maintain activities
Property, plant and equipment additions (13 885 890) (1 803 289)
Intangible assets additions - (75 074)
Proceeds on disposal of available for sale investments - 967 455
Investment in financial asset - (560 000)
Investment in joint venture - (400 000)
Investment in associate (49) -
Net cash from investing activities (13 885 939) (1 870 908)
Cash flows used in financing activities
Proceeds from the issue of share capital - 2 852 598
Repayments of other financial liabilities (84 289 137) (99 772 682)
Loans receivable 1 271 845 (1 742 313)
Proceeds from (repayment to) holding company (361 213) 1 122 283
Net cash used in financing activities (83 378 505) (97 540 114)
Total cash movement for the year (4 706 281) (2 030 766)
Cash at the beginning of the year 16 379 498 18 410 264
Cash at the end of the year 11 673 217 16 379 498
1. BASIS OF PREPARATION
The Board of Directors is pleased to present the Group’s audited results for the year ended
30 November 2015 in accordance with the JSE Limited (“JSE”) Listings Requirements, International
Financial Reporting Standards (“IFRS”) and are consistent with the prior year and IAS 34 on interim
reporting, and its interpretations issued by the International Accounting Standards Board (“IASB”), the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Council, and the Companies Act, 71 of 2008.
The results have been audited by Horwath Leveton Boner. Their unmodified 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).
These summarised audited consolidated financial statements have been derived from the Global
Group’s annual financial statements. The contents of this announcement are extracted from audited
information, although the announcement is not itself audited. The directors take full responsibility for
the preparation of the provisional report and the financial information has been correctly extracted
from the underlying annual financial statements.
The auditor’s report does not necessarily report on all the information contained in this announcement.
Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the
auditor’s engagement, they should obtain a copy of the auditor’s report together with the
accompanying financial information from the Company’s registered office.
2. PROPERTY, PLANT AND EQUIPMENT
Accumulated
Cost depreciation Carrying value
2015 R R R
Forklifts 669 836 932 (234 658 550) 435 178 382
Furniture and Fittings 71 619 (69 091) 2 528
IT equipment 328 938 (315 637) 13 301
Computer software 137 987 (133 012) 4 975
Motor vehicles 158 500 (10 567) 147 933
Plant under construction 4 623 259 - 4 623 259
Total 675 157 235 (235 186 857) 439 970 378
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
Carrying amounts of Property, plant and equipment can be reconciled as follows:
Carrying value Transfers to Carrying
opening trading value closing
balance Additions Disposals operations Depreciation balance
2015 R R R R R R
Forklifts 441 936 990 96 784 995 - (40 137 476) (63 406 127) 435 178 382
Furniture and Fittings 7 126 - - - (4 598) 2 528
Office equipment 5 832 - (3 998) - (1 834) -
IT equipment 42 168 - - - (28 867) 13 301
Computer software 10 941 - - - (5 966) 4 975
Tank containers 309 920 - (309 920) - - -
Motor vehicles - 158 500 - - (10 567) 147 933
Plant under
construction - 4 623 259 - - - 4 623 259
Total 442 312 977 101 566 754 (313 918) (40 137 476) (63 457 959) 439 970 378
Carrying value Transfers to Carrying
opening trading value 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
Total 409 072 068 119 929 244 (4 072 463) (21 707 485) (60 908 387) 442 312 977
Change in estimate
During the year ended 30 November 2015 the Group changed its estimate of the residual values on
used forklift trucks. The effect of this change in estimated residual values resulted in the following
change to the depreciation expense recognised as part of cost of sales:
2015
R
Increase in depreciation expense 852 279
3. INVESTMENT IN FINANCIAL ASSET
2015 2014
R R
Investment in Earthwise Energy Holdings (Pty) Ltd (“EWEH”)
Opening balance 2 250 000 -
Cost - 560 000
Fair value adjustment through profit and loss - 1 690 000
Closing balance 2 250 000 2 250 000
The Group has a 5% interest in EWEH.
The carrying amount of the financial asset is shown at fair value.
Shareholders are referred to subsequent events note 15, indicating that an additional 90.25% interest
in EWEH was acquired subsequent to the financial year end.
4. SHARE CAPITAL
2015 2014
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 - -
There are 953 953 734 (2014: 953 953 734) unissued ordinary shares in terms of the memorandum of
incorporation.
2015 2014
R R
Issued:
Opening balance 34 795 085 31 942 487
Issued - 2 852 598
Closing balance 34 795 085 34 795 085
Issued share capital consists of 46 046 266 (2014: 46 046 266) ordinary shares at no par value.
5. EARNINGS PER SHARE (CENTS)
The calculation of the basic earnings per ordinary share is based on the profit attributable to ordinary
shareholders of R6 784 526 (2014: R11 305 227) and a weighted average number of ordinary shares
outstanding of 46 046 266 (2014: 45 606 699) for the year.
The calculation for the headline earnings per ordinary share is based on the headline profit attributable
to ordinary shareholders of R7 391 017 (2014: R13 438 588) and a weighted average number of
ordinary shares outstanding of 46 046 266 (2014: 45 606 699) for the year.
Basic and headline earnings
Total
2015 R
Basic earnings 6 784 526
Adjusted for:
Loss on the disposal of assets 313 918
Loss on the disposal of investment in joint venture 380 470
Tax effect (87 897)
Headline earnings 7 391 017
Total
2014 R
Basic earnings 11 305 227
Adjusted for:
Impairment on used forklift trucks (net of taxation) 2 932 174
Profit on the disposal of available for sale investments (net of
taxation) (798 813)
Headline earnings 13 438 588
2015 2014
Weighted average number of ordinary shares 46 046 266 45 606 699
Basic earnings per share (cents) 14.7 24.8
Headline earnings per share (cents) 16.1 29.5
There are no instruments in issue that would cause a dilutive effect.
5. BUSINESS OVERVIEW
Global announced its intent to focus on renewable energy businesses as well as waste-to-energy
opportunities during 2014. The Board has since crafted a long term strategy, which has carefully
mapped out the various milestones to be obtained during its 5 year transition period, from being an
asset finance house into becoming an important player in the renewable energy sector through its
GAM New Energy (Pty) Ltd (“GAM New Energy”) subsidiary. Global is currently in the second year of
implementing its renewable energy strategy. During the transition period, Global will continue to
employ its asset finance business, LFS Assets (Pty) Ltd, as a finance base and main source of
revenue.
Fossil fuel is finite. The search is on for new sources of energy, as well as using existing resources
more efficiently. The anticipated exponential increase in demand for basic resources, such as energy,
food and water in Africa, over the next 30 to 50 years, is well documented. Each of these categories
represents important investment opportunities which are best accessed through very specific, niche
opportunities. Global has developed a portfolio of technologies that will exploit rising energy
requirements by unlocking alternative sources of energy.
Through its newly founded subsidiary Enviroprotek (Pty) Ltd (“Enviroprotek”), Global has established a
waste tyre recycling plant, which converts waste rubber into industrial fuel oil, carbon black and steel.
The plant has been successfully commissioned and is fully operational. Cashflows are expected to
nd
turn positive during the 2 quarter of 2016. The Company has also secured proprietary technology out
of the US, for the recycling of waste mining tyres. The technology is ready for commercialisation and
the business venture is projected to commence with construction during the 3rd quarter of 2016.
GAM New Energy has also given the go ahead towards the planning and detailed engineering phase
of its first waste plastic plant in Springs, housed within Plastic Green Energy (Pty) Ltd (“PGE”), a joint
venture with Futuregrowth Asset Management (Pty) Ltd. Making use of proprietary technology
acquired through the purchase of the majority shareholding in EWEH, PGE will recover the latent
energy inherent in waste plastic by converting it into liquid fuel, aimed at the industrial fuel oil market.
GAM New Energy has also commenced with the launch of its first Concentrated Solar Power (“CSP”)
plant through its associate Heliosek (Pty) Ltd. The technology allows for the highly efficient exploitation
of the unlimited solar resource base of Southern Africa and creates an opportunity for the expansion
into other international jurisdictions. The technology offers an alternative to existing solar energy and
other renewable energy solutions, however, at a lower comparative cost.
7. FINANCIAL RESULTS
The main business of the Group has continued to grow with new rental contracts being signed during
the year and an increase in the sales of forklift trucks.
Points of Interest:
- Revenue increased by 10.5% compared to the previous reporting period.
- The lower gross profit margin when compared to the 2014 financial year is due to the lower
margins obtained from the increase in sales of used forklift trucks.
- Global achieved a profit for 2015 of R6.8 million, in spite of incurring operating and development
costs on its early-stage renewable energy businesses in the Group in line with the long term
strategy of Global. Profits in relation to these businesses are expected to be generated over the
next twelve to twenty four months.
- The net asset value per share has improved from 243.4 cents to 258.1 cents.
- Since November 2014, property, plant and equipment in the statement of financial position
remained consistent. This was as a result of the additional value of forklift trucks acquired for the
primary rental book being nullified by the increase in sales of used forklift trucks during the period
under review.
- Other financial liabilities including trade and other payables, decreased marginally compared to
the same period last year.
It should be noted that the current portion of other financial liabilities reflected on the statement of
financial performance represents a twelve 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.
8. SEGMENTAL REPORTING
Segmental information has been reported by the Group in the following segments, namely rentals,
maintenance, sale of forklifts, renewable energy and other income.
Sale of Renewable
Rentals Maintenance forklifts energy Other Intragroup Total
2015 R R R R R R R
Revenue 153 119 013 40 987 672 31 489 857 - 6 394 916 (27 477 348) 204 514 110
Cost of sales (87 608 187) (39 958 652) (40 137 476) - (3 752 995) 24 202 060 (147 255 250)
Gross profit 65 510 826 1 029 020 (8 647 619) - 2 641 921 (3 275 288) 57 258 860
Operating expenses,
finance costs and
other income (43 579 535) - - (3 826 419) (3 915 456) 3 275 288 (48 046 122)
Taxation (5 780 456) (271 220) 2 279 263 1 008 534 335 667 - (2 428 212)
Profit after tax 16 150 835 757 800 (6 368 356) (2 817 885) (937 868) - 6 784 526
Depreciation and
impairment (63 406 127) - - - (51 832) - (63 457 959)
Additional
information
Segment assets 502 080 242 - - 6 667 606 94 532 298 (79 031 266) 524 248 880
Additions to property -
plant and equipment 96 784 995 - - 1 970 606 2 811 153 101 566 754
Deferred tax asset - - - 1 557 831 95 895 - 1 653 726
Deferred tax liability (47 672 129) - - - 65 736 7 426 882 (40 179 511)
Segment liability (430 798 241) - - (461 816) (3 670 028) 29 533 763 (405 396 322)
Rentals Maintenance Other Total
2014 R R R R
Revenue 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 (55 351 515) - (491 136) (55 842 651)
Segment liability (424 413 454) - (12 918 408) (437 331 862)
The renewable energy segment is in the development stage and will start to generate revenue within
the next twelve months.
During the current period the Group has identified sale of forklifts as a new reportable segment as it
now represents in excess of 10% of turnover, and renewable energy as a new reportable segment as
it now represents in excess of 10% of the combined reported loss of all operating segments that
reported losses. The Group has not presented comparative information for these segments as the
required historical information is not readily available and in its judgement would require excessive
cost to develop this information.
9. DIRECTORS
During the year under review, the Board of Directors was constituted as follows:
Name Position/title
Niels Penzhorn Chief Executive Officer
Werner Petrus Basson Chief Financial Officer
Marinus Cornelis Christoffel (“Koos”) van Ettinger Chief Operating Officer
Alan Jerome Naidoo Independent Non-Executive Director
Gabriel Thono Magomola Independent Non-Executive Director
Gordon Kenneth Cunliffe Independent Non-Executive Director and
Chairman
10. SHARE CAPITAL / REPURCHASE OF SHARES
During the period presented, the Company did not issue new shares, but subsequent to year end the
Company issued 8 111 309 shares as part settlement for the acquisition of an additional 90.25%
interest in EWEH. The shares were issued at R1.90 per share.
The Company intends raising further capital to grow its renewable energy and CSP businesses and
thus intends issuing an additional 20 million shares during 2016. Further details will be announced in
due course.
Global did not repurchase any shares during the period under review.
11. DIVIDEND
The Company has not declared a dividend for the year ended 30 November 2015 (2014: R Nil).
12. LITIGATION
As at year end, there was 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 (2014: R Nil).
14. COMMITMENTS
Software is in the process of being developed. The commitment at 30 November 2015 was R424 926
(2014: R424 926). There is no commitment at 30 November 2015 for the plant under construction.
15. SUBSEQUENT EVENTS
Claw-back Offer and BEE subscription
The Company elected not to pursue a claw back offer following advanced negotiations with a BEE
investor, which intends subscribing for new shares in Global for R40 million. The R40 million will be
raised in pursuance of the capitalisation strategy for the various waste to energy and CSP projects in
the Group.
Acquisition of a controlling interest in EWEH
Subsequent to year end, Global has acquired a 90.25% in EWEH for a maximum consideration of
R37 858 358.16, settled as follows:
* Through the issue of 8 111 309 Global shares at the 30 day Volume Weighted Average Price
being R1.90;
* An amount of R4 368 055 payable in cash;
* The issue of a maximum of 2 703 766 earn-out Global shares, to be issued at the earlier of the
Global share price reaching R5.00 per share or the achievement of profit warranties over a six
year period, being a maximum consideration of R13 518 830.
* An additional maximum earn-out cash amount of R4 559 891.06 payable over a period of six
years; and
* 9.5% of the existing issued share capital of TRR for a consideration of R95.00 at R1.00 per share.
In addition, the Company has entered into a separate agreement dated 18 December 2015 for the
acquisition of a further 5% in EWEH for a cash consideration of R2 million.
This takes Global’s shareholding in EWEH to 95.25%.
GAM New Energy is in the process of launching its first pyrolysis plant through its newly formed
subsidiary Enviroprotek which is aimed at converting waste rubber into industrial fuel oil, carbon black
and steel with a projected commencement during the 1st quarter of 2016.
There are no other major events subsequent to 30 November 2015 that require disclosure.
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 the Group, 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 Board believes that the Group has excellent prospects to significantly 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
returns for its shareholders.
This prospect statement has not been review or audited by the Company’s auditors.
By order of the Board
GK Cunliffe N Penzhorn
Chairman Chief Executive Officer
Johannesburg
9 March 2016
Registered Office
Ruimsig Country Office Park
Block E, 129 Hole in One Avenue
Ruimsig North
Roodepoort, 1724
Directors
GK Cunliffe*; MCC van Ettinger; N Penzhorn; WP Basson; GT Magomola*; AJ Naidoo*
* - independent non-executive
Designated Advisor Transfer Office
Arbor Capital Sponsors Proprietary Limited Link Market Services Proprietary Limited
Date: 09/03/2016 05:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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