Wrap Text
Reviewed Interim Financial Statements For The Period Ended 31 August 2016
GAIA INFRASTRUCTURE CAPITAL LIMITED
(previously GAIA Capital Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2015/115237/06)
(Share Code: GAI, ISIN ZAE000210555)
("GAIA") or "the Company")
Interim Financial Statements
for the period ended 31 August 2016
Highlights and key metrics
November 2015
- Listed as a SPAC on the JSE on 12 November 2015
- Capital raising of R551 million, issued 55 150 000 shares at R10 per share
18 October 2016
- Shareholders to vote on acquisition of viable asset
- Shareholders to vote on a special resolution giving GAIA general authority to
repurchase any shares issued by the company
As at 31 August 2016
Market capitalisation R482 million
Share price R8.74
Comprehensive income for the period R12.6 million
Interest earned on capital raised R18.6 million
NAV R563 million
Tangible net asset value per share R10.20
Directors' Report
The directors submit their report on the interim financial statements of GAIA
Infrastructure Capital Limited for the period ended 31 August 2016.
1. Review of financial results and activities
The interim financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting. The accounting policies are in terms of IFRS and have
been applied consistently to that which was disclosed in the annual report for the
period ended 29 February 2016.
GAIA was incorporated on 16 April 2015 and is focused on acquiring equity stakes in
emerging South African infrastructure investment assets, specifically in the energy,
transport and water and sanitation sectors. GAIA aims to be a leading infrastructure
investment holding company of infrastructure assets in South Africa and it's investment
philosophy is to invest in infrastructure assets that are operational, offer low risk
with inflationary linked returns, thereby providing shareholders with predictable,
inflation linked, and long-term yielding investments.
On 12 November 2015, GAIA listed as a Special Purpose Acquisition Company
("SPAC") on the Main Board of the JSE Limited ("JSE") and issued 55 150 000 shares
at R10 per share, thereby raising R551.5 million. The purpose of a SPAC is to
facilitate the process of raising primary capital to enable the acquisition of
viable assets in pursuit of a listing on the JSE.
The purpose of listing was to give institutional investors access to an attractive
alternative asset class that is usually only accessed through illiquid private equity
investments.
Full details of the financial position, results of operations and cash flows of the
company are set out in these interim financial statements.
GAIA is, subject to conditions precedent, in the process of acquiring a viable asset,
following which GAIA shall transform from a SPAC to an investment holding company on
the JSE.
Following approval by the JSE, a circular containing full details of the transaction
was published on 19 September 2016. The circular also contained a notice of a
general meeting to be held on 18 October 2016, at which the shareholders will be
required to vote on the transaction. An outline of the transaction is provided below:
In terms of the proposed transaction, GAIA will acquire an effective see-through
economic interest of 25.2% in Dorper Wind Farm (RF) (Pty) Ltd ("Dorper Wind Farm")
for a total consideration (including transaction costs) of R512 643 700. GAIA
will also be granted an option to acquire interests in three additional renewable
energy projects in which TriAlpha Specialised Investment Trust III currently holds
minority interests.
Dorper Wind Farm, situated outside of Molteno in the Eastern Cape, is a successful
Round 1 project in South Africa's REIPPPP, which achieved commercial operation in
2014, is fully operational and is delivering electricity into the South African grid.
Dorper Wind Farm has a 20-year Power Purchase Agreement (PPA) at a set price
that escalates annually with inflation and is de-risked through a Government backed
guarantee.
This investment opportunity provides GAIA and its Shareholders with an operational
and appropriately de-risked secondary investment opportunity. The projected cash
flows are uncorrelated to the market (due to the nature of the PPA) and provide
GAIA and its Shareholders with consistent and stable inflation-linked cash
distributions.
The investment has been valued by applying a discounted cash flow methodology
and using appropriate assumptions, it is expected that the investment will generate:
- a return of CPI+6.8% gross of ongoing fees over the term of the electricity off-take
agreement with Eskom; and
- the net yield after ongoing management fees of CPI+6% equals the benchmark
gross return, thereby outperforming the stated target return.
Following the implementation of the Acquisition, GAIA's targeted annualised
dividend distribution rate shall be CPI plus 2.5%, which distribution rate shall be
calculated with reference to GAIA's net asset value.
To date the Gaia shares have been trading at a discount. The directors have
therefore resolved to propose at the general meeting to be held on 18 October 2016,
a special resolution giving Gaia and its subsidiaries general authority to repurchase
any of the Shares issued by the Company, upon such terms and conditions and in
such amounts as the Directors may from time to time determine, but subject to the
provisions of the Companies Act, the MOI and the JSE Listings Requirements.
Interim Statement of Financial Position
31 August 29 February
2016 2016
Reviewed Audited
Note(s) R R
Assets
Current assets
Loans to related parties 4; 10 1 026 -
Financial assets 3 565 607 644 549 042 504
Current tax receivable - 971 588
Cash and cash equivalents 5 787 496 2 347 179
566 396 166 552 361 271
Equity and liabilities
Equity
Share capital 6 545 851 762 545 851 762
Retained income 16 726 993 4 058 528
562 578 755 549 910 290
Liabilities
Non-current liabilities
Deferred tax - 146 030
Current liabilities
Trade and other payables 1 169 492 1 717 885
Loans from related parties 4; 10 58 648 587 066
Current tax payable 2 589 271 -
3 817 411 2 304 951
Total liabilities 3 817 411 2 450 981
Total equity and liabilities 566 396 166 552 361 271
Shares in issue 55 151 000 55 151 000
Net asset value per share 10.20 9.97
Interim Statement of Profit or Loss and Other Comprehensive Income
for the period ended 31 August 2016
16 April 2015
to
31 August 29 February
2016 2016
Reviewed Audited
Note(s) R R
Operating expenses (3 595 982) (5 236 221)
Operating loss (3 595 982) (5 236 221)
Investment income 7 18 646 925 9 992 043
Finance costs (4 473) (45 768)
Fair value adjustment 8 2 402 562 825 077
Profit before taxation 17 449 032 5 535 131
Taxation (4 780 567) (1 476 603)
Profit for the period 12 668 465 4 058 528
Earnings per share information
Basic earnings per share (cents) 9 22.97 21.54
Diluted earnings per share (cents) 9 22.97 21.54
Headlines earnings per share (cents) 9 22.97 21.54
The preparation of the interim financial statements for the 6 months ended 31 August 2016
was supervised by the financial director Tamee Soudien-Witten.
The interim financial statements have been reviewed by KPMG Inc., which issued an unmodified
report which is available for inspection at the registered address of GAIA.
Interim Statement of Changes in Equity
for the period ended 31 August 2016
Share Retained Total
capital income equity
R R R
Balance at 16 April 2015 - - -
Profit for the period - 4 058 528 4 058 528
Issue of shares 551 500 100 - 551 500 100
Transaction costs (5 648 338) - (5 648 338)
Balance at 1 March 2016 - Audited 545 851 762 4 058 528 549 910 290
Profit for the period - 12 668 465 12 668 465
Balance at 31 August 2016 - Reviewed 545 851 762 16 726 993 562 578 755
Interim Statement of Cash Flows
for the period ended 31 August 2016
16 April 2015
to
31 August 29 February
2016 2016
Reviewed Audited
Note(s) R R
Cash flows from operating activities
Cash used in operations (4 144 374) (3 476 350)
Investment income 18 646 925 9 992 043
Finance costs (4 473) (45 768)
Tax paid (1 365 739) (2 302 160)
Net cash from operating activities 13 132 339 4 167 765
Cash flows from investing activities
Purchase of financial assets - (551 500 000)
Proceeds from disposal of financial assets 4 470 000 3 240 586
Investment income reinvested (18 632 578) -
Net cash from investing activities (14 162 578) (548 259 414)
Cash flows from financing activities
Proceeds from share issue 6 - 551 500 100
Capitalised listing costs 6 - (5 648 338)
Movement in related-party loans (529 444) 587 066
Net cash from financing activities (529 444) 546 438 828
Total cash movement for the period (1 559 683) 2 347 179
Cash at the beginning of the period 2 347 179 -
Total cash at the end of the period 5 787 496 2 347 179
Accounting Policies
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these interim financial
statements are set out below.
1.1 Basis of preparation
The interim financial statements are prepared in accordance with International
Financial Reporting Standard ("IAS") 34 Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial Reporting Standards Council
and the requirements of the Companies Act of South Africa. The accounting policies
applied in the preparation of these interim financial statements are in terms of
International Financial Reporting Standards and are consistent with those applied
in the previous annual financial statements.
The interim financial statements have been prepared on the basis of accounting
policies applicable to a going concern.
The basis presumes that funds will be available to finance future operations and
that the realisation of assets and settlement of liabilities, contingent obligations
and commitments will occur in the ordinary course of business.
The financial statements have been prepared on the fair value basis, except for
other assets. Liabilities and equity are stated at historic cost. The functional and
presentation currency is the South African Rand.
The preparation of the interim financial statements for the 6 months ended
31 August 2016 was supervised by the financial director Tamee Soudien Witten.
The interim financial statements have been reviewed by KPMG Inc., which issued an
unmodified report which is available for inspection at the registered address of
GAIA Infrastructure Limited.
The directors take full responsibility for the preparation of the interim financial
statements.
1.2 Consolidation
Basis of consolidation
An investment entity which acquires an interest in a subsidiary, joint venture or
associate shall be exempt from consolidation or equity accounting in terms of
amendments to IFRS 10, IFRS 12 and IAS 28 and shall measure an investment in a
subsidiary, joint venture or associate at fair value through profit or loss.
An investment entity is defined as an entity that:
- obtains funds from one or more investors for the purpose of providing those
investors with investment management services;
- commits to its investors that its business purpose is to invest in partners solely
for returns from capital appreciation, investment income, or both; and
- measures and evaluates the performance of substantially all of its investments on
a fair value basis.
GAIA Infrastructure Capital Ltd meets the definition of an investment entity and
therefore does not consolidate its investment in subsidiary GAIA Financial Services
(Pty) Ltd.
1.3 Financial instruments
Classification
The company classifies financial assets and financial liabilities into the following
categories:
- Financial assets at fair value through profit or loss
- Loans and receivables
- Financial liabilities measured at amortised cost
Classification depends on the purpose for which the financial instruments were
obtained/incurred and takes place at initial recognition. Classification is reassessed
on an annual basis, except for derivatives and financial assets designated as at fair
value through profit or loss, which shall not be classified out of the fair value
through profit or loss category.
Financial assets classified as at fair value through profit or loss which are no longer
held for the purposes of selling or repurchasing in the near term may be reclassified
out of that category:
- in rare circumstances
- if the asset met the definition of loans and receivables and the entity has the
intention and ability to hold the asset for the foreseeable future or until maturity.
Initial recognition and measurement
Financial instruments are recognised initially when the company becomes a party to
the contractual provisions of the instruments.
The company classifies financial instruments, or their component parts, on initial
recognition as a financial asset, a financial liability or an equity instrument in
accordance with the substance of the contractual arrangement.
Financial instruments are measured initially at fair value, except for equity
investments for which a fair value is not determinable, which are measured at cost
and are classified as available-for-sale financial assets.
For financial instruments which are not at fair value through profit or loss, transaction
costs are included in the initial measurement of the instrument.
Transaction costs on financial instruments at fair value through profit or loss are
recognised in profit or loss. Regular way purchases of financial assets are
accounted for at trade date.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the
investments have expired or have been transferred and the company has
transferred substantially all risks and rewards of ownership.
GAIA Infrastructure Capital Ltd will derecognise a financial liability when its
contractual obligations are discharged, cancelled or expire.
Fair value determination
The fair values of quoted investments are based on current bid prices. If the market
for a financial asset is not active (and for unlisted securities), the company
establishes fair value by using valuation techniques. These include the use of recent
arm's length transactions, reference to other instruments that are substantially the
same, discounted cash flow analysis, and option pricing models making maximum
use of market inputs and relying as little as possible on entity-specific inputs.
Impairment of financial assets
At each reporting date the company assesses all financial assets, other than those
at fair value through profit or loss, to determine whether there is objective evidence
that a financial asset or group of financial assets has been impaired.
For amounts due to the company, significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy and default of payments are all
considered indicators of impairment.
Impairment losses are recognised in profit or loss.
Impairment losses are reversed when an increase in the financial asset's recoverable
amount can be related objectively to an event occurring after the impairment was
recognised, subject to the restriction that the carrying amount of the financial asset
at the date that the impairment is reversed shall not exceed what the carrying amount
would have been had the impairment not been recognised.
Reversals of impairment losses are recognised in profit or loss except for equity
investments classified as available-for-sale.
Impairment losses are also not subsequently reversed for available-for-sale equity
investments which are held at cost because fair value was not determinable.
Where financial assets are impaired through use of an allowance account, the
amount of the loss is recognised in profit or loss within operating expenses. When
such assets are written off, the write off is made against the relevant allowance
account. Subsequent recoveries of amounts previously written off are credited
against operating expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known amount
of cash and are subject to an insignificant risk of changes in value. These are
initially measured at fair value and subsequently recorded at amortised cost which
approximates its fair value.
2. Interest in subsidiary
An investment entity which acquires an interest in a subsidiary, joint venture or associate
shall be exempt from consolidation or equity accounting in terms of amendments to IFRS 10,
IFRS 12 and IAS 28 and shall measure an investment in a subsidiary, joint venture or
associate at fair value through profit or loss.
GAIA Infrastructure Capital Ltd meets the definition of an investment entity and therefore
will not consolidate its investment in subsidiaries.
At 31 August 2016 GAIA Infrastructure Capital Ltd has a 100% equity holding in GAIA
Financial Services (Pty) Ltd. At present GAIA Financial Services (Pty) Ltd has not yet
begun trading and as such the carrying value at period end is nil.
31 August 29 February
2016 2016
Reviewed Audited
R R
3. Financial assets
At fair value through profit or loss
Unit Trust Investment - Coronation Jibar Plus Fund - 549 042 504
Unit Trust Investment - Coronation Money Market Fund 565 607 644 -
565 607 644 549 042 504
Current assets
At fair value through profit/loss 565 607 644 549 042 504
4. Loans to/(from) related parties
GAIA Infrastructure Partners (Pty) Ltd (58 648) (587 066)
GAIA Financial Services (Pty) Ltd 1 026 -
(57 622) (587 066)
The loan from GAIA Infrastructure Partners (Pty) Ltd is
unsecured, has no fixed terms of repayment and bears
interest at prime plus 2.5%.
The loan to GAIA Financial Services (Pty) Ltd is
unsecured, interest free and has no fixed terms
of repayment.
Current assets 1 026 -
Current liabilities (58 648) (587 066)
(57 622) (587 066)
5. Cash and cash equivalents
Cash and cash equivalents consist of:
Bank balances held by First National Bank 787 496 2 347 179
6. Share capital
Reconciliation of number of shares issued:
Opening balance 55 151 000 -
Shares issued on incorporation on 16 April 2015 - 1 000
Shares issued on date of listing on 13 November 2015 - 55 150 000
55 151 000 55 151 000
Issued
55 151 000 no par value shares, net of capitalising cost 545 851 762 545 851 762
7. Investment income
Interest income
From investments in financial assets:
First National Bank 14 347 -
Unit trusts - Coronation Jibar Plus Unit Trust Fund - 9 992 043
Unit trusts - Coronation Money Market Fund 18 632 578 -
Total interest income 18 646 925 9 992 043
8. Fair value adjustment
Increase in value of Coronation Jibar Unit Trust Fund 2 402 562 825 077
9. Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing profit or loss attributable to the
ordinary equity holders by the weighted average number of ordinary shares
outstanding during the period. Profit or loss attributable to the ordinary equity holders
is determined as profit or loss after adjusting for the after tax effect.
31 August 29 February
2016 2016
Reviewed Audited
R R
Basic earnings per share (cents per share) 22.97 21.54
Basic earnings per share was based on earnings of R12 668 465 and weighted average
number of ordinary shares of 55 151 000, calculated based on 1 000 shares issued on
16 April 2015 and 55 150 000 shares issued on 12 November 2015.
The current period's earnings per share should be viewed in the context of the following:
- GAIA Infrastructure Capital Ltd has not yet acquired a viable asset and therefore
income earned is not indicative of the company's future performance capability.
Diluted earnings per share
In the determination of diluted earnings per share, profit or loss attributable to the
equity holders and the weighted average number of ordinary shares are adjusted for
the effects of all dilutive potential ordinary shares.
31 August 29 February
2016 2016
Reviewed Audited
R R
Diluted earnings per share (cents per share) 22.97 21.54
Diluted earnings per share is equal to earnings per share because there are no dilutive
potential ordinary shares in issue.
Headline earnings and diluted headline earnings per share
Headline earnings per share is calculated using Circular 2/2015. Headline earnings
per share and diluted headline earnings per share are determined by dividing headline
earnings and diluted headline earnings by the weighted average number of ordinary
shares outstanding during a period.
Headline earnings and diluted headline earnings are determined by adjusting basic
earnings and diluted earnings by excluding separately identifiable remeasurement
items. Headline earnings and diluted headline earnings are presented after tax and
non-controlling interest.
31 August 29 February
2016 2016
Reviewed Audited
R R
Headline earnings per share (cents) 22.97 21.54
Diluted headline earnings per share (cents) 22.97 21.54
10. Related parties
Relationships
GAIA Infrastructure Partners (Pty) Ltd has been appointed as Manager of GAIA
Infrastructure Capital Ltd and therefore has significant influence.
GAIA Infrastructure Partners (Pty) Ltd holds 1 000 shares in GAIA Infrastructure
Capital Ltd.
An annual management fee is paid to GAIA Infrastructure Partners (Pty) Ltd in
quarterly instalments. The annual management fee is calculated by multiplying the
total subscription value by 0.5%.
31 August 29 February
2016 2016
Reviewed Audited
R R
Related-party balances
Loan accounts - owing (to)/by related parties
GAIA Infrastructure Partners (Pty) Ltd (58 648) (587 066)
GAIA Financial Services (Pty) Ltd 1 026 -
The loan from GAIA Infrastructure Partners (Pty) Ltd is
unsecured, has no fixed terms of repayment and bears
interest at prime plus 2.5%.
The loan to GAIA Financial Services (Pty) Ltd is
unsecured, interest free and has no fixed terms
of repayment.
Related-party transactions
Interest paid to (received from) related parties
GAIA Infrastructure Partners (Pty) Ltd 4 469 45 767
Management fees
GAIA Infrastructure Partners (Pty) Ltd 1 584 694 936 376
11. Contingencies
If GAIA Infrastructure Capital Ltd is unable to acquire a viable asset within 24 months,
as prescribed in the JSE Listings Requirements' Section 4.37, shareholders would
receive distribution pro rata to their holdings of accrued interest, less permitted
expenses.
12. Events after the reporting period
GAIA is, subject to conditions precedent, in the process of acquiring a viable asset,
following which GAIA shall transform from a SPAC to an investment holding company
on the JSE.
Following approval by the JSE, a circular containing full details of the transaction was
published on 19 September 2016. The circular also contained a notice of a general
meeting to be held on 18 October 2016, at which the shareholders will be required to
vote on the transaction.
13. Comparative figures
GAIA Infrastructure Capital Ltd was incorporated on 16 April 2015 and listed on the
JSE on 12 November 2015. It had no trading activities prior to listing and no interim
report was issued for the period ended 31 August 2015. Therefore, the results for the
period 16 April 2015 to 29 February 2016 have been presented as comparative figures in
the Statements of Profit and Loss and Other Comprehensive Income, Changes in Equity '
and Cash Flows.
14. Segmental Information
At 31 August 2016, GAIA Infrastructure Capital Ltd has no reportable segments as the
company has not acquired viable assets.
General information
Country of incorporation and domicile
South Africa
Directorate
The directors in office at the date of this report are as follows:
Appointment Resignation
Directors date date
L De Wit (Chairman) Executive Chairman 1 October 2015
N Kimber Independent Non-Executive Director 1 October 2015
KP Lebina Independent Non-Executive Director 1 October 2015
RB Makhubela Independent Non-Executive Director 1 October 2015 31 July 2016
C Ferreira Non-Executive Director 1 October 2015
PB Schabort Non-Executive Director 1 October 2015
KE Mbalo Independent Non-Executive Director 1 October 2015
TD Soudien-Witten Finance Director 1 October 2015
MM Nieuwoudt Chief Investment Officer 19 April 2015
JR Oliphant Managing Director 1 October 2015 19 April 2016
The following changes have been made to the Board of Directors:
- Mr. Makhubela has resigned as independent non-executive director with effect
from 31 July 2016.
- Ms. Prudence Lebina ("Prudence") has been appointed as Chief Executive Officer,
effective 1 October 2016.
- Mr. Eddie Mbalo ("Eddie") has been appointed as an Independent Non-Executive
Chairman of the Company with effect from 19 October 2016. Eddie will replace
Leon de Wit, who will continue to serve on the Board.
The Board appointed a nomination committee, chaired by Mr. Eddie Mbalo, on
11 August 2016. The nomination committee has tasked by the Board to fill the
resultant vacancies on the Board.
Registered office
37 Vineyard Road
Claremont
7708
Business address
37 Vineyard Road
Claremont
7708
Postal address
PO Box 44721
Claremont
7735
Bankers
FirstRand Bank Ltd
Auditors
KPMG Inc.
Chartered Accountants (S.A.)
Registered Auditors
Secretary
Exceed (Cape Town) Inc.
Company registration number
2015/115237/06
Tax reference number
9473/844/17/4
Level of assurance
These interim financial statements have been reviewed in accordance with the
International Standard on Review Engagements 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity.
Preparer
The interim financial statements were independently compiled under the
supervision of Tamee Soudien-Witten CA(SA)
Issued
28 September 2016
Sponsor
PSG Capital Proprietary Limited
(Registration number 2006/015817/07)
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch, 7600
(PO Box 7403, Stellenbosch, 7599)
www.gaia-ic.com
Date: 28/09/2016 01:00:00 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.
Sharenet Sites 
