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Unaudited Interim Results for the Six Month Period Ended 31 May 2017
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 2017
The Board of directors of Global is pleased to present the unaudited interim results of Global and its
subsidiaries (“the Group”) for the six-month period ended 31 May 2017.
Condensed statement of comprehensive income
Restated
6 months 12 months 6 months
Unaudited Audited Unaudited
31 May 30 November 31 May
2017 2016 2016
R’000 R’000 R’000
Revenue 102 083 197 101 86 208
Cost of sales (72 649) (145 795) (58 696)
Gross profit 29 434 51 306 27 512
Other income 3 994 1 186 152
Operating expenses (12 980) (22 769) (11 054)
Income from operations 20 448 29 723 16 610
Investment income 57 308 166
Finance costs (15 372) (31 165) (15 439)
Profit/(loss) before taxation 5 133 (1 134) 1 337
Taxation (692) 305 (318)
Profit/(loss) for the period 4 441 (829) 1 019
Total profit/(loss) attributable to:
Equity holders of the parent 4 633 (620) 1 019
Non-controlling interest (192) (209) -
Total comprehensive income/(loss) 4 441 (829) 1 019
Total comprehensive income/(loss) attributable to:
Equity holders of the parent 4 633 (620) 1 019
Non-controlling interest (192) (209) -
Earnings per share information (Refer to note 7):
Basic and diluted earnings per share (cents) 8.4 (1.2) 1.9
Condensed consolidated statement of financial position
Unaudited Audited Unaudited
31 May 30 November 31 May
2017 2016 2016
R’000 R’000 R’000
Assets
Non-current assets 507 216 496 114 497 398
Property, plant and equipment 443 922 440 275 441 531
Goodwill 37 959 37 959 39 291
Intangible asset 896 1 075 1 075
Investments in joint venture and associate 205 - -
Loans and advances to customers 21 353 13 682 14 194
Deferred tax asset 2 881 3 123 1 307
Current assets 98 123 56 381 58 396
Loans to joint venture and associate 12 149 1 136 585
Other loan receivable 209 187 187
Trade and other receivables 39 137 43 840 48 937
Cash and cash equivalents 46 355 8 221 8 628
Inventories 273 2 997 59
Total assets 605 339 552 495 555 794
Equity and liabilities
Equity
Share capital 97 158 57 208 58 031
Reserves 95 697 89 688 89 555
Shareholders’ equity 192 855 146 896 147 586
Non-controlling interest 21 434 1 462 1 904
Total equity 214 289 148 358 149 490
Liabilities
Non-current liabilities 255 623 248 725 260 163
Loans payable 209 764 204 684 215 976
Contingent consideration payable 2 551 2 551 2 551
Deferred tax liability 43 308 41 490 41 636
Current liabilities 135 427 155 412 146 141
Loans payable 104 534 109 458 114 604
Other financial liabilities 4 734 15 237 4 368
Taxation - 46 -
Trade and other payables 26 159 30 671 27 169
Total equity and liabilities 605 339 552 495 555 794
Per share information
Net asset value per share (cents per share) 262.5 271.2 272.5
Number of shares in issue at period end 73 481 246 54 157 575 54 157 575
Condensed consolidated statement of cash flows
Unaudited Audited Unaudited
31 May 30 November 31 May
2017 2016 2016
R’000 R’000 R’000
Cash flows from operating activities
Cash generated from operations 61 056 136 016 35 855
Interest income 57 308 166
Finance costs (15 069) (30 781) (15 439)
Taxation (488) 385 (284)
Net cash generated from operating activities 45 556 105 928 20 298
Cash flows from investing activities
Property, plant and equipment additions (2 285) (14 339) (1 060)
Cash (outflow)/ inflow on (disposal)/ acquisition
of subsidiary (124) 13 -
Amount advanced to a related party (185) (1 032) (381)
Net cash used in investing activities (2 594) (15 358) (1 441)
Cash flows from financing activities
Proceeds of ordinary shares issued 49 355 - -
Payment of share issue expenses (50) (824) -
Repayment of loans payable (54 133) (102 946) (22 154)
Proceeds from loans receivable - - 252
Increase in other financial liabilities - 9 748 -
Net cash applied in financing activities (4 828) (94 022) (21 902)
Total cash movement for the period 38 134 (3 452) (3 045)
Cash at the beginning of the period 8 221 11 673 11 673
Cash at end of the period 46 355 8 221 8 628
Restated condensed consolidated statement of changes in equity
Shareholders
interest before
Common non- Non-
Share control Retained controlling controlling Total
capital reserve earnings interest interest equity
R’000 R’000 R’000 R’000 R’000 R’000
Balance at
30 November 2015 34 795 (6 941) 90 999 118 853 - 118 853
Share issue 23 236 - - 23 236 - 23 236
Share issue
expenses (823) - - (823) - (823)
Acquisition of non-
controlling interest - - - - 1 900 1 900
Surplus on part
disposal of
subsidiary - - 6 021 6 021 - 6 021
Change in non-
controlling interest in
subsidiaries - - 229 229 (229) -
Total comprehensive
loss - - (620) (620) (209) (829)
Total changes 22 413 - 5 630 28 043 1 462 29 505
Balance at
30 November 2016 57 208 (6 941) 96 629 146 896 1 462 148 358
Share issue 40 000 - 1 040 41 040 - 41 040
Share issue
expenses (50) - - (50) - (50)
Acquisition of non-
controlling interest - - - - 20 500 20 500
Change in non-
controlling interest in
subsidiary - - 522 522 (522) -
Derecognition due to
change in control - - (186) (186) 186 -
Total comprehensive
income - - 4 633 4 633 (192) 4 441
Total changes 39 950 - 6 009 45 959 19 972 65 931
Balance at
31 May 2017 97 158 (6 941) 102 638 192 855 21 434 214 289
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 2017. 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
principle 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 2016.
The financial results have been prepared by the financial director, Mr W Basson CA (SA).
2. INDUSTRY AND BUSINESS OVERVIEW
The drive towards cleaner and greener technologies has established itself as an irreversible
trend in the energy sector since the turn of the century. Having identified attractive
opportunities aligned with this trend, Global intends to build a multinational renewable energy
business focussing on waste-to-energy solutions as well as solar energy. Below follows a brief
overview of the various subsidiaries within Global that are focussing on renewable and clean
energy.
Enviroprotek (Pty) Ltd has established a commercial waste tyre recycling plant, which converts
waste rubber into industrial fuel oil, carbon black and steel. Cashflows are expected to turn
positive during the third quarter of 2017 once a second reactor has been added to the current
operations. The company has secured a supply contract with REDISA (Recycling and
Economic Development Initiative of South Africa).
Plastics Green Energy (Pty) Ltd (“PGE”) has finalised the construction of a plastics recycling
pilot plant at its Springs site and will commence with the construction of its first commercial
plant during the third quarter of 2017. Making use of its own proprietary technology, PGE will
recover the latent energy inherent in waste plastic by converting it into liquid fuel aimed at the
industrial fuel oil market.
Heliosek (Pty) Ltd has completed the design for its initial pilot plant to be established during
2017. 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.
The performance of LFS Assets (Pty) Ltd (“LFS”), Global’s main subsidiary, which focuses on
asset financing in the logistics sector, has been encouraging, albeit given the difficult
economic environment prevalent in South Africa. LFS will look to employ its current funding
base to assist in the funding of renewable energy assets being established in its fellow
subsidiaries. Significant growth opportunities exist in this area. Margins are also expected to
be more attractive than in the truck financing operations.
3. FINANCIAL RESULTS
African Rainbow Capital (Pty) Ltd (“ARC”) transaction
The previously announced subscriptions to the following shares were concluded during the
period under review:
- The subscription by ARC to 19 323 671 Global shares (constituting approximately
26.3% of Global’s shares following such subscription) for a consideration of R40 million.
- The subscription by ARC of shares in Enviroprotek (Pty) Ltd (“EPT”) is such that ARC
holds 46% of the shares in EPT.
A binding voting pool agreement has been entered into by ARC and certain shareholders of
Global in respect of not less than 50% of Global’s shares and Global shareholders approved a
waiver of a mandatory offer. The voting pool agreement will allow the parties to the voting pool
agreement to maintain control of Global.
Subscription of shares in Plastics Green Energy (Pty) Ltd (“PGE”)
As previously announced, a subscription agreement providing for the subscription of shares in
PGE by Futuregrowth Asset Management (Pty) Ltd (“Futuregrowth”) and Earthwize Energy
Holdings (Pty) Ltd, a 95.25% subsidiary within the Global Group of Companies, was
concluded.
The Group and Futuregrowth have subscribed to R26.5 million and R20.5 million respectively,
in equity funding to PGE. This resulted in the Group owning a 55% share, and Futuregrowth
owning a 45% share in PGE.
Points of Interest as a result of the above mentioned transactions:
- Global recorded a profit after taxation of R4.4 million for the 6 months ended 31 May
2017. The profit is primarily due to the Group’s disposal of a subsidiary being recognised
due to a change in control.
- The increase in loans to the joint venture and associate was due to the recognition of
the EPT loan. ARC subscription to shares in Global’s then subsidiary EPT resulted in a
change in control. EPT is accordingly now being equity accounted instead of being
consolidated, which resulted in the derecognition of EPT’s assets, liabilities and retained
losses as part of the Group results.
- Cash and cash equivalents increased because of ARC’s subscription to Global shares
and Futuregrowth’s subscription to PGE shares.
- Futuregrowth’s subscription to shares in PGE was also the main contributor to the
increase in non-controlling interest.
- The net asset value per share has decreased by 3.2% from 271.2 cents per share to
262.5 cents per share following the ARC subscription to Global shares.
- Other financial liabilities decreased in line with the capitalisation of ARC’s loan as part of
their subscription to Global shares.
Other points of Interest:
- The gross profit margin increased compared to the prior period due to the profitable
margins achieved on the sale of forklift trucks.
- Loans and advances to customers increased significantly due to the increase in new
forklift truck sales.
- The recoverability of trade and other debtors improved compared to the prior periods
ended 30 November 2016 and 31 May 2016 respectively.
- The decrease in inventories compared to the prior period ended 30 November 2016,
related to the sale of second hand forklift trucks.
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 the current receivables arising from
the matching rental contracts. The net current liability position of the Group is accordingly
considered sound as current liabilities will be settled by ongoing monthly rental billings.
4. RESTATEMENTS
The comparative interim results have been restated in line with the 30 November 2016 year-
end results where applicable.
5. RELATED PARTY TRANSACTIONS
The Group’s consolidated financial statements for the year ended 30 November 2016 contain
details of the Group’s related party relationships and should be read in conjunction with this
report.
The related party transactions during the period ended 31 May 2017, with the exception of
EPT being derecognised as a subsidiary due to the change in control, do not materially
deviate from the transactions as reflected in the financial statements for the year ended 30
November 2016.
The derecognition of EPT as a subsidiary resulted in the recognition of a loan to EPT of R10,8
million. The loan is unsecured and is payable on demand. In order to provide loan capital to
the joint venture in funding its project the loan is interest free. Related party transactions are at
arm’s length.
6. SEGMENTAL REPORTING
Segmental information has been reported by the Group in the following segments, namely
rentals and maintenance, sale of forklifts, renewable energy and other transactions.
Rentals and Sale of Renewable
GROUP maintenance forklifts energy Other Intergroup Total
May 2017 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 97 718 16 711 - 3 380 (15 726) 102 083
Cost of sales (68 873) (16 122) - - 12 346 (72 649)
Gross profit 28 845 589 - 3 380 (3 380) 29 434
Operating expenses,
finance costs and
other income (21 576) - (719) (5 386) 3 380 (24 301)
Taxation (2 040) (165) 1 213 300 - (692)
Profit after tax 5 229 424 494 (1 706) - 4 441
Depreciation and
impairment (33 122) - - (17) - (33 139)
Additional
information
Additions to property
plant and equipment 54 357 - 2 347 123 - 56 827
Total segmental
assets 486 952 - 65 191 163 556 (110 360) 605 339
Segment assets 486 952 - 62 310 163 556 (110 360) 602 458
Deferred tax asset - - 2 881 - - 2 881
Total segmental
liability (388 241) - (51 531) (22 689) 71 411 (391 050)
Segment liability (336 012) - (51 531) (22 689) 62 490 (347 742)
Deferred tax liability (52 229) - - - 8 921 (43 308)
Rentals and Sale of Renewable
GROUP maintenance forklifts energy Other Intergroup Total
November 2016 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 197 420 25 704 - 3 474 (29 497) 197 101
Cost of sales (142 561) (27 978) - - 24 744 (145 795)
Gross profit 54 859 (2 274) - 3 474 (4 753) 51 306
Operating expenses,
finance costs and
other income (48 039) - (6 150) (3 004) 4 753 (52 440)
Taxation (1 833) 611 1 654 (127) - 305
Profit after tax 4 987 (1 663) (4 496) 343 - (829)
Depreciation and
impairment (66 982) - - (53) - (67 035)
Additional
information
Additions to property
plant and equipment 87 404 - 10 476 31 - 97 911
Total segmental
assets 485 255 - 14 389 135 599 (82 748) 552 495
Segment assets 485 255 - 11 266 135 599 (82 748) 549 372
Deferred tax asset - - 3 123 - - 3 123
Total segmental
liabilities (400 145) - (21 177) (26 055) 43 239 (404 138)
Segment liability (349 355) - (21 177) (26 055) 33 939 (362 648)
Deferred tax liability (50 790) - - - 9 300 (41 490)
RESTATED Rentals and Sale of Renewable
GROUP Maintenance forklifts energy Other Intergroup Total
May 2016 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 89 320 11 220 126 380 (14 838) 86 208
Cost of sales (55 962) (15 889) - (1) 13 156 (58 696)
Gross profit 33 358 (4 669) 126 379 (1 682) 27 512
Operating expenses,
finance costs and
other income (23 590) - (2 709) 1 558) 1 682 (26 175)
Taxation (2 616) 1 307 661 330 - (318)
Profit after tax 7 152 (3 362) (1 922) (849) - 1 019
Depreciation and
impairment (32 763) - - (27) - (32 790)
Additional
information
Additions to property
plant and equipment 36 905 - 1 441 - - 38 346
Total segmental
assets 491 921 - 5 173 130 703 (72 003) 555 794
Segment assets 491 921 - 4 241 130 328 (72 003) 554 487
Deferred tax asset - - 932 375 - 1 307
Total segmental
liabilities (422 875) - (232) (5 702) 22 505 (406 304)
Segment liability (372 353) - (232) (5 702) 13 619 (364 668)
Deferred tax liability (50 522) - - - 8 886 (41 636)
Project management, corporate services and any other income is below the quantitative
threshold set by IFRS for reporting.
7. HEADLINE EARNINGS AND SHARE INFORMATION
The headline earnings reconciliation and per share information is set out below:
31 May 30 November 31 May
R’000 2017 2016 2016
Basic earnings 4 633 (620) 1 019
Adjusted for:
Impairment of used forklift trucks - 836 -
Profit on disposal of subsidiary (3 791) - -
Non-controlling interest 349 - -
Headline earnings 1 191 216 1 019
Per share information:
Weighted average number of ordinary shares ‘000 54 901 53 648 53 138
Basic earnings per share (cents) 8.4 (1.2) 1.9
Headline earnings per share (cents) 2.2 0.4 1.9
There are no instruments in issue that would cause a dilutive effect.
8. BOARD OF DIRECTORS
The current board is constituted as follows:
Name Position/title
Niels Penzhorn Chief Executive Officer
Werner Petrus Basson Chief Financial Officer
Marinus Cornelis Christoffel 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 Chairman
Machiel Johannes Reyneke* Non-Executive Director
Brenda Matyolo* Non-Executive Director
*Appointed to the board of directors on 19 July 2017
9. SHARE CAPITAL AND ISSUE/REPURCHASE OF SHARES
During the period presented the Company issued 19 323 671 new shares in Global for a
consideration of R40 million as part of the African Rainbow Capital (Pty) Ltd transaction as
previously announced.
Global did not repurchase any shares during the period under review.
10. DIVIDEND
The Company has not declared a dividend for the interim period ended 31 May 2017 (2016:
R Nil).
11. 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.
12. CONTINGENT LIABILITIES
At the reporting date, the Group does not have any contingent liabilities (2016: R Nil).
13. SUBSEQUENT EVENTS
There are no major events subsequent to 31 May 2017 that require disclosure.
14. FUTURE PROSPECTS
The directors of the Company believe that the Group has good prospects to expand its
operations over the next year based on its current pipeline of recycling energy projects and
initiatives supported by the Group’s strong complement of management skills and strategic
partners.
By order of the Board
GK Cunliffe N Penzhorn
Chairman Chief Executive Officer
Johannesburg
24 August 2017
Registered Office
Building 2
Clearwater Office Park
Cnr Christiaan de Wet & Millennium Boulevard
Strubensvalley
Roodepoort
1735
Directors
G.K Cunliffe*#; M.C.C van Ettinger; N Penzhorn; W.P Basson; G.T Magomola*#; A.J Naidoo*#;
M.J Reyneke*; B Matyolo*
* - non-executive, # - independent
Designated Advisor Transfer Office
Arbor Capital Sponsors Proprietary Limited Link Market Services Proprietary Limited
Date: 24/08/2017 04:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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