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Unaudited Interim Results for the Six Month Period Ended 31 May 2016
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 INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 31 MAY 2016
The Board of Directors of Global are pleased to present the unaudited interim results of Global and
its Subsidiaries (“the Group”) for the six month period ended 31 May 2016.
Condensed statement of comprehensive income
6 months 12 months 6 months
Unaudited Audited Unaudited
31 May 30 November 31 May
2016 2015 2015
R’000 R’000 R’000
Revenue 86 208 204 514 93 828
Cost of sales (58 696) (147 255) (63 761)
Gross profit 27 512 57 259 30 067
Other income 5 923 411 173
Operating expenses (11 054) (19 276) (10 582)
Operating profit before interest 22 381 38 394 19 658
Interest received 166 324 72
Finance costs (15 439) (29 505) (13 986)
Profit before taxation 7 108 9 213 5 744
Taxation (1 611) (2 428) (1 637)
Profit for the period 5 497 6 785 4 107
Total comprehensive Income 5 497 6 785 4 107
Total profit attributable to equity holders 5 497 6 785 4 107
Total comprehensive income attributable to
equity holders 5 497 6 785 4 107
Per share information (Refer to note 6 below):
Headline earnings per share (cents) 1.9 16.1 8.9
Basic earnings per share (cents) 10.3 14.7 8.9
Condensed consolidated statement of financial position
Unaudited Audited Unaudited
31 May 30 November 31 May
2016 2015 2015
R’000 R’000 R’000
Assets
Non-current assets 497 398 457 031 479 048
Property, plant and equipment 441 531 439 970 446 665
Goodwill 39 291 - -
Intangible asset 1 075 1 075 1 075
Investment in financial asset - 2 250 2 250
Loans and advances to customers 14 194 12 082 10 270
Deferred tax 1 307 1 654 18 788
Current assets 58 396 67 218 67 735
Other loan receivable 772 471 938
Trade and other receivables 48 937 55 037 51 913
Cash and cash equivalents 8 628 11 673 14 884
Inventory 59 37 -
Total assets 555 794 524 249 546 783
Equity and liabilities
Total equity 149 490 118 853 116 175
Ordinary share capital 58 031 34 795 34 795
Reserves 89 555 84 058 81 380
Share-holders equity 147 586 118 853 116 175
Non-controlling interest 1 904 - -
Liabilities
Non-current liabilities 260 163 280 112 268 412
Other financial liabilities 218 527 239 932 212 020
Deferred tax 41 636 40 180 56 392
Current liabilities 146 141 125 284 162 196
Loan from holding company - 252 -
Other financial liabilities 118 972 95 967 122 453
Current tax payable - 192 342
Trade and other payables 27 169 28 873 39 401
Total equity and liabilities 555 794 524 249 546 783
Per share information
Net asset value per share (cents per share) 272.5 258.1 252.2
Number of shares in issue at period end 54 157 575 46 046 266 46 046 266
Condensed consolidated statement of cash flows
Unaudited Audited Unaudited
31 May 30 November 31 May
2016 2015 2015
R’000 R’000 R’000
Cash generated from operating activities 20 298 92 558 38 752
Cash (used in)/generated from investing (1 441) (13 886) 300
activities
Cash used in financing activities (21 902) (83 379) (40 548)
Total cash movement for the period (3 045) (4 707) (1 496)
Cash at the beginning of the period 11 673 16 380 16 380
Total cash at end of the period 8 628 11 673 14 884
Condensed consolidated statement of changes in equity
Common Attributable Non-
Share Control Retained to equity controlling Total
capital reserve income holders interest equity
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 30
November 2014 34 795 (6 941) 84 214 112 068 - 112 068
Total comprehensive
income - - 6 785 6 785 - 6 785
Total changes - - 6 785 6 785 - 6 785
Balance at 30
November 2015 34 795 (6 941) 90 999 118 853 - 118 853
Share issue 23 236 - - 23 236 1 904 25 140
Total comprehensive
income - - 5 497 5 497 - 5 497
Total changes 23 236 - 5 497 28 733 1 904 30 637
Balance at 31 May
2016 58 031 (6 941) 96 496 147 586 1 904 149 490
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 2016. 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) and the
JSE Listings Requirements. 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 2015.
The financial results have been prepared by the financial director, Mr W Basson CA (SA).
2. INDUSTRY AND BUSINESS OVERVIEW
Global announced its intent to focus on renewable energy businesses as well as waste-to-
energy opportunities during 2015. The Board of Global has since crafted a long term strategy,
which has carefully mapped out the various milestones to be achieved 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. 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.
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. An application to REDISA has been made to be allocated waste tyres under the
REDISA plan.
GAM New Energy has also given the go ahead for 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
Earthwize Energy Holdings (Pty) Ltd, 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 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 expansion into other international jurisdictions. The technology offers an
alternative to existing solar energy and other renewable energy solutions at a lower
comparative cost.
3. FINANCIAL RESULTS
Revenue dropped to R86.2 million for the six months ended 31 May 2016 from R93.8 million
for the prior comparative period. This was mainly due to the weak market conditions. Cost of
sales was R58,7 million for the six month ended 31 May 2016.
Other income increased to R5.9 million from R173k, primarily due to value realised on the sale
of 9.5% of Total Rubber Recycling (“TRR”) as part of the Earthwise transaction, further details
of which are set out below.
Global achieved an interim profit of R5.5 million for the six months ended 31 May 2016, 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 commence over the next six to eighteen 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 the current receivables
arising from the matching rental contracts. The net current liability position of the Group is
considered sound as current liabilities will be settled by ongoing monthly rental billings.
Acquisition of a controlling interest in Earthwise Energy Holdings (Pty) Ltd:
As announced on SENS, during December 2015, GAM acquired a controlling interest in
Earthwise Energy Holdings (Pty) Ltd (“EWEH”). The controlling interest held after this
transaction is 95.25% and is made up as follows:
- 5% acquired from Altena (Transaction 1) during December 2015
- 85.25% acquired from vendors (Transaction 2) during December 2015
- 5% acquired in previous financial periods
Transaction 1
A 5% interest in EWEH was acquired for a cash consideration of R2 million from Altena, this
transaction was in contemplation of Transaction 2 described below.
Transaction 2
An 85.25% interest in EWEH was acquired by a combination of cash and equity instruments
including components that are contingent on future events. Each of the major components,
and the related fair values (which may differ from the agreement values between parties), are
disclosed in the table below:
Acquisition of 85.25% in December 2015:
R
8 111 309 GAM shares 23 236 966
Cash consideration 2 368 055
Additional GAM shares contingent on profit warrants 1 724 567
Additional contingent cash amount 826 585
TRR shares transferred to vendors 6 021 152
Total 34 177 325
Previously held interest
GAM held 5% in EWEH from prior periods and the fair value of this 5% determined as
R2 million (based on the price achieved in Transaction 1 above).
The total consideration paid for the 95.25% interest in EWEH, inclusive of the previously held
interest is therefore R38,2 million. At the date of acquisition, the fair value of EWEH’s net
assets was provisionally determined to be R0,8 million. Consequently, Goodwill on the
acquisition of EWEH is provisionally determined as follows:
R
Consideration paid 38.2 million
Non-controlling interest 1.9 million
Less, Fair value of assets acquired (0,8 million)
Goodwill R39,3 million
GAM is of the view that the proprietary technology developed by EWEH in the area of plastic
to oil operations will prove to become extremely valuable in the area of renewable energy and
is therefore satisfied that the goodwill on the transaction is reflective of the value expected to
be realised in the future from the acquisition.
4. SEGMENTAL REPORTING
Segmental information has been reported by the Group in the following segments, namely
rentals, maintenance, sale of forklifts, renewable energy and other transactions.
Sale of Renewable Inter-
GROUP Rentals Maintenance forklifts energy Other group Total
May 2016 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 66 689 22 631 11 220 126 380 (14 838) 86 208
Cost of sales (33 213) (22 749) (15 889) - (1) 13 156 (58 696)
Gross profit 33 476 (118) (4 669) 126 379 (1 682) 27 512
Operating
expenses,
finance costs
and other
income (23 590) - - 3 062 (1 558) 1 682 (20 404)
Taxation (2 649) 33 1 307 (632) 330 - (1 611)
Profit after
tax 7 237 (85) (3 362) 2 556 (849) - 5 497
Depreciation
and
impairment (32 763) - - - (27) - (32 790)
Additional
information
Segment
assets 491 921 - - 5 173 130 703 (72 003) 555 794
Additions to
property plant
and
equipment 36 905 - - 1 441 - - 38 346
Deferred tax
asset - - - 932 375 - 1 307
Deferred tax
liability (50 522) - - - - 8 886 (41 636)
Segment
liability (422 875) - - (232) (5 702) 22 505 (406 304)
GROUP Rentals Maintenance Other Total
May 2015 R’000 R’000 R’000 R’000
Revenue 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,
finance costs and other
income (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 525 199 - 21 584 546 783
Additions to property
plant and equipment 44 918 - 1 500 46 418
Deferred tax assets 17 503 - 1 285 18 788
Deferred tax liability (56 266) - (126) (56 392)
Segment liability (421 273) - (9 335) (430 608)
Project management, corporate services and any other income is below the quantitative
threshold set by IFRS for reporting.
5. RELATED PARTY TRANSACTIONS
Relationships:
Ultimate holding company: Inshare (Pty) Ltd
Fellow subsidiaries: Inshare Asset Finance Holdings (Pty) Ltd
Ocean Crest Trading 11 (Pty) Ltd
E B M Project (Pty) Ltd
Dalton Sugar Company (Pty) Ltd
Joint venture: Energon SA (Pty) Ltd
Associate: Heliosek (Pty) Ltd
Related party transactions were as follows:
GROUP
GROUP NOVEMBER
MAY 2016 2015
R’000 R’000
Related party balances
Loan account owing (to) by related parties
Inshare (Pty) Ltd - (252)
The loan is unsecured, bears interest and is payable on
demand. There was no evidence of impairment for the
period end 31 May 2016, thus the fair value approximates
the carrying value as stated.
Heliosek (Pty) Ltd 484 103
The loan is unsecured, and is payable on demand. There
was no evidence of impairment for the period end 31 May
2016, thus the fair value approximates the carrying value as
stated. In order to assist the associate in funding its project
the loan is interest free.
Related party transactions are at arm’s length.
Loan repaid/(advanced to)
Inshare (Pty) Ltd (252) (338)
Heliosek (Pty) Ltd (381) (103)
Rent paid to related parties
Ocean Crest Trading 11 (Pty) Ltd 483 878
Management fee paid to (received from)
Inshare Asset Finance Holdings (Pty) Ltd 738 1 476
Energon SA (Pty) Ltd - (85)
Dalton Sugar Company (Pty) Ltd (275) (300)
Consulting fee received
E B M Project (Pty) Ltd - (3 000)
6. EARNINGS PER SHARE
The calculation of the basic earnings per ordinary share is based on the profit attributable to
ordinary shareholders of R5 497 000 (30 November 2015: R6 785 000; 31 May 2015: R4 107
000) and a weighted average number of ordinary shares outstanding of 53 138 121 (30
November 2015: 46 046 266; 31 May 2015: 46 046 266) for the year.
The calculation for the headline earnings per ordinary share is based on the headline profit
attributable to ordinary shareholders of R1 019 000 (30 November 2015: R7 391 000 and 31
May 2015: R4 107 000) and a weighted average number of ordinary shares outstanding of
53 138 121 (30 November 2015: 46 046 266 and 31 May 2015: 46 046 266) for the year.
Basic and headline earnings
Total
MAY 2016 R’000
Basic earnings 5 497
Adjusted for:
Profit on the part disposal of a subsidiary (net of taxation) (4 478)
Headline earnings 1 019
Total
NOVEMBER 2015 R’000
Basic earnings 6 785
Adjusted for:
Loss in disposal of assets (net of taxation) 226
Loss in disposal of investment in joint venture (net taxation) 380
Headline earnings 7 391
Total
MAY 2015 R’000
Basic earnings 4 107
Adjustments -
Headline earnings 4 107
Weighted average number of ordinary shares
MAY NOVEMBER MAY
2016 2015 2015
Weighted average number of ordinary shares 53 138 121 46 046 266 46 046 266
Earnings per share
MAY NOVEMBER MAY
2016 2015 2015
Basic earnings per share (cents) 10.3 14.7 8.9
Headline earnings per share (cents) 1.9 16.1 8.9
There are no instruments in issue that would cause a dilutive effect.
7. BOARD OF DIRECTORS
The current board is constituted as follows:
Name (Age) 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
van Ettinger
Alan Jerome Naidoo 1 November 2012 Non-Executive Director
Gabriel Thono Magomola 1 November 2012 Lead Independent Non-
Executive Director
Gordon Kenneth Cunliffe 1 November 2012 Non-Executive Chairman
There have been no changes to the board of directors in the period under review.
8. SHARE CAPITAL AND ISSUE/REPURCHASE OF SHARES
During the period presented, the Company issued 8.1 million new shares in Global as part of
the Earthwise Energy Holdings transaction.
The company intends raising further capital to grow its renewable energy and energy
efficiency businesses and thus intends placing an additional 19.3 million shares over a period
of time. 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 2016 (2015:
R Nil) in line with its stated intention in the prospectus at the time of listing.
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 (2015: R Nil).
12. SUBSEQUENT EVENTS
A subscription agreement providing for the subscription of shares in Plastic Green Energy
(Pty) Ltd (“PGE”) by Futuregrowth and Earthwise Energy Holdings (Pty) Ltd (“EWEH”), a
95.25% subsidiary within the Global group of companies (“the Parties”), has been concluded
(“the Transaction”).
Futuregrowth and Global have agreed to advance equity funding to PGE and Futuregrowth will
accordingly subscribe for shares in the issued share capital of PGE such that immediately
after the subscriptions, Futuregrowth will hold 45% and EWEH will hold 55% of the issued
share capital of PGE.
The subscription is subject to various conditions precedent, mainly relating to operational and
intellectual property matters, but including confirmation of no material changes to the project
plan.
The Transaction will have no impact on the Statement of Comprehensive Income and the net
asset value of Global. Cash and cash equivalents will increase by R20.25 million and the
amount attributable to minority shareholders will similarly increase by R20.25 million.
13. FUTURE PROSPECTS
The directors of the Company believe that the Group has good prospects to diversify its
operations over the next year, based on its current pipeline of projects, initiatives and strong
management skills.
By order of the Board
GK Cunliffe N Penzhorn
Chairman Chief Executive Officer
Johannesburg
29 June 2016
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: 29/06/2016 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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