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GAIA INFRASTRUCTURE CAPITAL LIMITED - Reviewed condensed interim financial statements for the six months ended 31 August 2018 & cash dividend declaration

Release Date: 06/11/2018 17:30
Code(s): GAI     PDF:  
 
Wrap Text
Reviewed condensed interim financial statements for the six months ended 31 August 2018 & cash dividend declaration

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")

Reviewed condensed interim financial statements
for the six months ended 31 August 2018 and cash dividend declaration

Salient features
- Tangible Net Asset Value* ("TNAV") per share at R10.17
- Interim cash dividend declaration of 24.84 cents 
- Asset diversification through exercise of an option, on conversion of a convertible loan, 
  into solar PV assets
- Earnings received by GAIA's wholly owned subsidiary from underlying investments increased 
  to R28.9 million
- Headline earnings per share down to 7 cents per share
- Strong pipeline of investment opportunities yielding above target investment return

* Pre-interim dividend payment.

FINANCIAL COMMENTARY
GAIA's revenue is generated from dividend income, interest income and fair value movement on the 
investment portfolio. The Company's investments are held through a wholly owned subsidiary, GAIA 
Financial Services (RF) Proprietary Limited ("GFS"). GFS's revenue was down 37% to R14.4 million, 
made up of dividend and interest income of R28.9 million and a fair value loss of R14.5 million. 
The decrease in fair value was as a result of a change in some of the discount rates applied in 
determining the fair value of the assets. This led to a lower dividend income being distributed 
by GFS to GAIA.

The Company's revenue for the six months period decreased by 42.3% driven largely by a decrease in 
fair value movement on the investment portfolio of GFS. Interest received on cash holdings decreased 
from R2.6 million in 2017 to R0.7 million, as a final cash dividend distribution of 42 cents was 
paid on 9 July 2018 and cash was also deployed to operating the Company.

Operating expenses for the period were R9.7 million (2017: R7.6 million) as the Company has 
increased its internal capacity in anticipation of an increased investment portfolio. Operating 
expenses as a percentage of assets under management have decreased with the acquisition of 
Noblesfontein, and are expected to improve as the Company increases its investment base.

The Company's TNAV is expected to remain stable at or around the level of R10.00 per share as 
the Board has resolved to pay dividends on a semi-annual basis given the predictable flow of cash 
income from the investment portfolio.

ASSET PERFORMANCE OVERVIEW
Dorper Wind Farm
Net production of electricity and therefore revenue at Dorper Wind Farm has increased with better 
than expected weather conditions leading to electricity produced by the wind farm being 22.7% above 
P50 quarterly expectation in Q1 and 14.2% in Q2. GAIA remains confident that the project will 
continue to perform according to expectations.

Noblesfontein Wind Farm
The wind farm's revenue for the period was above expectation with 8% positive variance in Q1 and 
4% positive variance in Q2, as a result of good weather conditions and plant performance. The 
electricity produced by the wind farm for the interim period was 5.7% above the P50 expectation due 
to better than forecast weather conditions.

DIVIDEND DECLARATION
As at 28 February 2018, GAIA's TNAV was R10.53 per share, following which a final dividend of 
42.0 cents per share was declared and paid in July 2018. This reduced TNAV to R10.11 per share. 
For the current reporting period, the Company's earnings per share were 6.73 cents, thereby 
increasing TNAV to R10.17 per share. 

GAIA's dividend policy is to pay a consistent and stable inflation-linked dividend. The Board 
has analysed the cash requirements of the Company and resources required to continue to pursue the 
Company's strategic objectives and has resolved to maintain the dividend distribution in line with 
the interim dividend paid for the previous financial year.

Notice is hereby given that the Board has declared an interim cash dividend of 24.84 cents 
(19.872 cents net of dividend withholding tax) per ordinary share for the six-month period ended 
31 August 2018. The dividend has been declared from income reserves. A dividend withholding tax of
20% will be applicable to all shareholders who are not exempt from or do not qualify for a 
reduced rate of dividend withholding tax. 

The issued share capital at the declaration date is 55 151 000 ordinary shares.

Salient dates for the dividend will be as follows:
- Last day to trade cum dividend         Tuesday, 20 November 2018
- First trading day ex dividend          Wednesday, 21 November 2018
- Record date                            Friday, 23 November 2018
- Payment date                           Monday, 26 November 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 21 November 2018 
and Friday, 23 November 2018, both days inclusive.

This interim dividend amounting to R13.7 million has not been recognised as a liability in these
reviewed condensed interim financial results. It will be recognised in shareholders' equity for 
the year ending 28 February 2019.

EVENTS AFTER REPORTING PERIOD
Asset diversification - shareholders are referred to the announcement released on the Securities 
Exchange News Service on 26 October 2018, regarding the diversification of the Company's investment 
portfolio through the exercise of an option, on conversion of an existing convertible loan, into 
minority interests in three renewable energy projects in South Africa ("the IK Option"), namely 
Jasper, Lesedi and Letsatsi solar PV farms ("Solar Energy Assets"). GAIA's resultant effective 
interest in the Solar Energy Assets is 4.0% in Jasper, 5.3% in Lesedi and 5.3% in Letsatsi. 
The Solar Energy Assets are operational, round 1 Renewable Energy Independent Power Producer 
Procurement Programme ("REIPPPP") solar PV plants.

The IK Option was exercised on 31 October 2018.

ABOUT GAIA
GAIA is a diversified infrastructure investment holding company listed on the Main Board of the 
JSE Limited. The Company was formed to facilitate the investment of long-term capital in large-scale 
energy, transport and water and sanitation infrastructure projects in Southern Africa. The 
investment policy is to invest in:
- operational infrastructure assets;
- investments with a target return on at least CPI plus 6%;
- investments with visible environmental, social and governance policy appreciation; and
- investments with low risk and attractive long-term, inflation-linked and predictable cash 
  generation profiles.
  
As at 31 August 2018, GAIA had two investments in its portfolio:
- an effective see-through economic interest of 25.2% in Dorper Wind Farm through an equity 
  interest in GAIA RE 1 Proprietary Limited; and
- an effective see-through economic interest of 20.0% in Noblesfontein Wind Farm through 
  C preference shares in GAIA SPV, A and B preference shares in SARGE and a receivable loan from 
  Noblesfontein Education Trust. 
  
Post the exercise of the IK Option on 31 October 2018, the  Company's  investment portfolio is 
made up of equity interests in:
- Dorper Wind Farm - 9.9%;
- Jasper Solar PV Farm - 4.0%;
- Lesedi Solar PV Farm - 5.3%;
- Letsatsi Solar PV Farm - 5.3%; and
- Noblesfontein Wind Farm - 20%.

Condensed Statement of Financial Position
as at 31 August 2018

                                                            Reviewed       Reviewed         Audited
                                                           31 August      31 August     28 February
                                                                2018           2017            2018
                                                Note(s)            R              R               R
Assets                                                                
Non-current assets                                                    
Property, plant and equipment                                377 650              -         424 639
Other financial assets                               2   508 444 789    511 123 029     505 789 987
Deferred tax                                                 103 437              -          71 268
                                                         508 925 876    511 123 029     506 285 894
Current assets                                                                          
Cash and cash equivalents                                 25 617 593     56 682 360      26 728 694
Trade and other receivables                               28 557 570      1 715 466      53 703 012
                                                          54 175 163     58 397 826      80 431 706
Total assets                                             563 101 039    569 520 855     586 717 600
Equity and liabilities                                                                  
Equity                                                                                  
Share capital                                            545 851 762    545 851 762     545 851 762
Retained income                                           15 273 883     18 912 920      34 728 077
                                                         561 125 645    564 764 682     580 579 839
Liabilities                                                                             
Non-current liabilities                                                                 
Deferred tax                                                       -      2 267 558               -
Current liabilities                                                                     
Trade and other payables                                   1 975 093      2 281 797       5 976 495
Current tax payable                                              301        206 818         161 266
                                                           1 975 394      2 488 615       6 137 761
Total equity and liabilities                             563 101 039    569 520 855     586 717 600
Net asset value per share (Rand)                               10.17          10.24           10.53

Condensed Statement of Profit or Loss and Other Comprehensive Income
for the six months ended 31 August 2018

                                                            Reviewed       Reviewed         Audited
                                                          six months     six months       12 months
                                                               ended          ended           ended
                                                           31 August      31 August     28 February
                                                                2018           2017            2018
                                                Note(s)            R              R               R
Revenue                                                                              
Interest income                                              783 747      2 569 975       4 283 757
Dividend income                                           10 000 000     13 282 512      60 023 045
Other income                                                  13 680              -         307 388
Net gain from financial assets at fair value                                         
through profit or loss                                     2 654 803      7 442 614      (2 595 544)
Total revenue                                             13 452 230     23 295 101      62 018 646
Total operating expenses                                  (9 701 853)    (7 549 963)    (18 455 992)
Operating profit before finance costs                      3 750 377     15 745 138      43 562 654
Finance costs                                                     (3)        (1 236)         (1 689)
Profit before taxation                                     3 750 374     15 743 902      43 560 965
Taxation                                                     (41 148)    (2 043 967)       (346 364)
Profit for the period                                      3 709 226     13 699 935      43 214 601
Earnings per share                                                                   
Per share information                                                                
Basic earnings per share (cents)                     3          6.73          24.84           78.36
Diluted earnings per share (cents)                   3          6.73          24.84           78.36

Condensed Statement of Changes in Equity
for the six months ended 31 August 2018

                                                               Share       Retained           Total
                                                             capital         income          equity
                                                                   R              R               R
Balance at 1 March 2017 - audited                        545 851 762     40 233 870     586 085 632
Profit for the period                                              -     13 699 935      13 699 935
Dividends                                                          -    (35 020 885)    (35 020 885)
Balance at 31 August 2017 - reviewed                     545 851 762     18 912 920     564 764 682
Profit for the period                                              -     29 514 666      29 514 666
Dividends                                                          -    (13 699 508)    (13 699 508)
Balance at 1 March 2018 - audited                        545 851 762     34 728 077     580 579 839
Profit for the period                                              -      3 709 226       3 709 226
Dividends                                                          -    (23 163 420)    (23 163 420)
Balance at 31 August 2018 - reviewed                     545 851 762     15 273 883     561 125 645

Condensed Statement of Cash Flows
for the six months ended 31 August 2018

                                                            Reviewed       Reviewed         Audited
                                                          six months     six months       12 months
                                                               ended          ended           ended
                                                           31 August      31 August     28 February
                                                                2018           2017            2018
                                                                   R              R               R
Cash flows from operating activities                                                  
Cash generated by (used in) operations                    22 286 603      9 044 720      (3 078 959)
Finance costs                                                     (3)        (1 236)         (1 689)
Tax paid                                                    (234 281)      (380 718)     (1 067 494)
Cash available from operating activities                  22 052 319      8 662 766      (4 148 142)
Dividends paid                                           (23 163 420)   (35 020 885)    (48 720 393)
Net cash generated by/(utilised in)                                                   
operating activities                                      (1 111 101)   (26 358 119)    (52 868 535)
Cash flows from investing activities                                                  
Purchase of property, plant and equipment                          -              -        (453 600)
Investment in financial asset at amortised cost                    -              -      (4 705 116)
Net cash utilised in investing activities                          -              -      (5 158 716)
Cash flows from financing activities                                                  
Prepayment of share issue expenses                                 -     (1 715 466)              -
Net cash utilised in financing activities                          -     (1 715 466)              -
Total cash movement for the period                        (1 111 101)   (28 073 585)    (58 027 251)
Cash at the beginning of the period                       26 728 694     84 755 945      84 755 945
Total cash at the end of the period                       25 617 593     56 682 360      26 728 694

CORPORATE INFORMATION
GAIA Infrastructure Capital Limited is a public company incorporated and domiciled in South Africa.
The interim financial statements for the period ended 31 August 2018 were authorised for issue in 
accordance with a resolution of the directors on 1 November 2018.

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     The principal accounting policies applied in the preparation of these reviewed interim 
     financial statements are set out below.
 
     1.1    Basis of preparation
            The interim financial statements are prepared in accordance with and contain the 
            information required by:
            - International Financial Reporting Standard ("IAS") 34 Interim Financial Reporting;
            - the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee;
            - the Financial Pronouncements as issued by the Financial Reporting Standards Council;
            - the requirements of the Companies Act of South Africa, 71 of 2008, as amended; and
            - the Listings Requirements of the JSE Limited.

            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 preparation of the Company's previous annual financial statements.
            
            The interim financial results 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.

            Sarah Keene CA(SA), Executive Financial Manager, prepared these interim financial 
            statements for the six months ended 31 August 2018 under the supervision of 
            P Lebina CA(SA), Interim Finance Director.

            The directors take full responsibility for the preparation of the interim financial 
            statements and for correctly extracting the financial information, from the reviewed 
            condensed interim financial statements for inclusion in the announcement.

            The reviewed condensed interim financial results for the six months ended 31 August 2018 
            were reviewed by the Company's external auditor, Deloitte & Touche. A copy of their 
            unmodified review conclusion is available for inspection at the Company's registered 
            office. Any reference to future financial performance included in this announcement, 
            has not been reviewed or reported on by the external auditor. 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.

     1.2    New standards and interpretations
            The Company has chosen not to early adopt the following standards and interpretations, 
            which have been published and are mandatory for the Company's accounting periods 
            beginning on or after 1 March 2018 or later periods:
            - IFRS 15 Revenue From Contracts with Customers; and
            - IFRS 16 Leases.

            The effects of the statements will not have a material impact on the Company's 
            financial statements.
            
            The statements will be applied to the 2019 and 2020 financial years, respectively, as 
            they become mandatory.

Notes to the Condensed Financial Statements
for the six months ended 31 August 2018
    
                                                                           Reviewed         Audited
                                                                         six months       12 months
                                                                              ended           ended
                                                                          31 August     28 February
                                                                               2018            2018
                                                                                  R               R
2.   FINANCIAL ASSETS AT FAIR VALUE THROUGH                                             
     PROFIT OR LOSS                                                                         
     At fair value through profit or loss - designated                                      
     GAIA Financial Services (Pty) Limited                              503 739 673     501 084 871

     GAIA Financial Services interest in Dorper
     The Dorper Acquisition was concluded on 20 December 2016. The Company funded the acquisition of 
     its effective see-through economic interest of 25.2% of Dorper, through a R501 million loan to 
     GAIA Financial Services. The loan was financed using the proceeds from the partial disposal of 
     the Company's unit trust investment. This loan is interest-free, unsecured and has no fixed 
     terms of repayment.
     
     The acquisition entailed the subscription for the ordinary shares in GAIA RE 1 equal to 34.9% 
     (R265 036 179) economic and voting interest of the issued share capital and the advancing of a 
     convertible loan (R235 963 821) to GAIA RE 1 which effectively gave the Company an economic 
     interest of 84.2% in GAIA RE 1.
     
     The convertible loan was able to be settled in one of two ways, conversion of the convertible 
     loan into indirect minority interests in three (3) additional Solar Energy Assets by the Group 
     or the conversion of the convertible loan into additional ordinary shares in GAIA RE 1 which 
     holds a 30% shareholding in Dorper. The option to acquire the minority interests in the Solar 
     Energy Assets was exercised on 31 October 2018.
 
     Post implementation of the IK Option, GAIA Financial Services holds 33% in GAIA RE 1 which 
     holds 30% of the issued share capital in Dorper, and effective interests of 16.2% in each of 
     Lesedi and Letsatsi and 12.1% in Jasper solar PV farms.
     
     GAIA Financial Services interest in Noblesfontein Wind Farm
     On 19 September 2017 GAIA Financial Services acquired C Preference Shares GAIA SPV (RF)(Pty) 
     Limited ("GAIA SPV") for an aggregate subscription price of R130 million and, as a result, 
     acquired an effective economic interest of 13.001% in the combined distributions linked to the 
     ordinary shares and shareholder loan claims against Noblesfontein Wind Farm.
     
     In addition, GAIA Financial Services entered into funding agreements with SARGE whereby GAIA 
     Financial Services subscribed for A Preference Shares and B Preference Shares in SARGE for an 
     aggregate subscription price of R57 493 127. As a result of the SARGE Transaction, GAIA 
     Financial Services acquired a further effective economic interest of 7.03% of the distributions 
     linked to the ordinary shares in the Noblesfontein Wind Farm.
     
     GAIA Financial Services was granted an irrevocable call option ("Call Option") in terms of 
     which GAIA Financial Services had an option to purchase all of the ordinary shares in GAIA SPV 
     for a purchase price of R100. The option was exercised on 2 August 2018.
     
     GAIA Financial Services obtained funding to facilitate, inter alia, its subscription for the 
     by it, of A Preference Shares and B Preference Shares to RMBIA for an aggregate subscription 
     price of approximately R188 million in terms of the GAIA Financial Services Preference Share 
     Subscription Agreement.
     
     The Company extended a loan to the Noblesfontein Educational Trust, having taken it over from 
     the previous shareholder at an interest rate, and with repayment terms more beneficial than 
     market rates and terms, in order to benefit the beneficiaries of the trust, being members of 
     the local Noblesfontein community.

                                                                                             Audited
                                                                           Six months      12 months
                                                                                ended          ended
                                                                            31 August    28 February
                                                                                 2018           2018
                                                                                    R              R
     Loans and receivables
     Noblesfontein Educational Trust                                        4 705 116      4 705 116
     The loan shall accrue interest at a rate equal to the aggregate of
     CPI plus 7% net of taxes applied as a nominal annual compounded
     monthly in arrears rate, and calculated on the loan outstanding
     principal for that interest period. The loan is secured by a 
     cession of any shares held by Noblesfontein Educational Trust in
     Noblesfontein Wind Farm.
     Total other financial assets                                         508 444 789    505 789 987
     Non-current assets
     Designated as at fair value through profit or loss                   503 739 673    505 789 987
     Loans and receivables at amortised cost                                4 705 116              -
                                                                          508 444 789    505 789 987
  
     Valuation of underlying renewable assets
     The value of the investment in the ordinary shares of Dorper was determined using the 
     discounted cash flow valuation model.
 
     Assumptions and inputs used in valuation techniques include long-term CPI forecast and 
     determination of an investor premium used in estimating discount rates.

     The value of the investments in the preference shares in SARGE and GAIA SPV are also calculated 
     using the discounted cash flow valuation model. The assumptions and inputs used include CPI 
     rate, prime rate and JIBAR.
 
     The objective of valuation techniques is to arrive at a fair value measurement that reflects 
     the prices that would be received to sell the investments in underlying renewable assets in an 
     orderly transaction between market participants at the measurement date.
 
     The Company uses valuation models that were developed by experienced independent third parties 
     during the bidding process for the rights of the project. These models have been developed 
     from recognised valuation models and developers' experience regarding the valuation of 
     renewable energy projects. 

     Some of the significant inputs into the discounted cash flow model may not be observable in 
     the market and are derived from market prices or rates or are based on assumptions. This 
     valuation model therefore requires additional management judgement and estimation in 
     determination of fair value.
 
     In the valuation for the investment in Dorper, and the preference shares related to 
     Noblesfontein, management's judgement and estimation is required for:
     - selection of the appropriate valuation model to be used, in this case the discounted cash 
       flow model;
     - assessment and determination of the expected cash flows from the investments; and
     - selection of the appropriate discount rate.
 
     The fair value estimate obtained from the discounted cash flow model will only be adjusted for
     factors such as liquidity risk and model uncertainty to the extent that the Company believes 
     that a third-party market participant would take them into account in pricing a transaction. 
     No such adjustments were deemed necessary in the valuation of the investments in underlying 
     renewable assets.
     
     The Company has an established control framework with respect to the measurement of fair 
     values.
 
     Specific controls include:
     - verification of observable pricing inputs;
     - a review and approval process for new models and changes to such models;
     - analysis and investigation of significant valuation movements; and
     - review of unobservable inputs and valuation adjustments.
     
     Fair value hierarchy of financial assets at fair value through profit or loss
     For financial assets recognised at fair value, disclosure is required of a fair value 
     hierarchy which reflects the significance of the inputs used to make the measurements.
 
     Level 1 represents those assets which are measured using unadjusted quoted prices in active 
     markets for identical assets.
 
     Level 2 applies inputs other than quoted prices that are observable for the assets either 
     directly (as prices) or indirectly (derived from prices).

     Level 3 applies inputs which are not based on observable market data. This category includes 
     all instruments for which the valuation technique includes inputs not based on observable 
     data and the unobservable inputs have a significant effect on the instrument's valuation. 
     This category includes instruments that are valued based on quoted prices for similar 
     instruments but for which significant unobservable adjustments or assumptions are required 
     to reflect differences between the instruments.
 
     The table below analyses financial instruments measured at fair value at the reporting date 
     by the level in the fair value hierarchy into which the fair value measurement is categorised. 
     The amounts are based on the values recognised in the statement of financial position. All 
     fair value measurements below are recurring.
 
                                                                             Reviewed        Audited
                                                                           six months      12 months
                                                                                ended          ended
                                                                            31 August    28 February
                                                                                 2018           2018
                                                                                    R              R
     Level 3
     GAIA Financial Services (Pty) Limited                                503 739 673    501 084 871
 
     As at 31 August 2018, the fair value measurement of shares held by the Company in GAIA Financial 
     Services is categorised into Level 3. The fair value of investments in its 100% subsidiary is 
     determined using unadjusted net asset value of GAIA Financial Services at the reporting date.
 
     Reconciliation of financial assets at fair value through profit or loss measured at Level 3
 
                                                            Opening   Gains in profit
                                                            balance           or loss          Total
     GAIA Financial Services (Pty) Limited              501 084 871         2 654 803    503 739 673
 
     The change in unrealised gains or losses (net gain) for the period is included in profit or 
     loss for financial assets held at the reporting date. These gains and losses are recognised in 
     profit or loss as a net gain from financial instruments at fair value through profit or loss.
     
     Significant unobservable inputs used in measuring fair value
     Significant unobservable inputs are developed as follows:
 
     Discount rate
     Represents the rate used to discount projected levered or unlevered forecast cash flows for an 
     asset to determine their present values. Their discounted present value cash flows are 
     determined as their fair value at reporting date. GAIA RE 1 uses a discount rate that 
     appropriately captures Dorper's stage-of-life, using South African data, substantiated by 
     international findings. GAIA FS used a discount rate that appropriately reflects the 
     Noblesfontein risk and return profile using South African data, substantiated by international 
     findings.
 
     CPI/JIBAR and Prime rate
     Rates are obtained from publicly available consensus views.
 
3.   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 tax effect.
                                                                  
                                                               Reviewed      Reviewed        Audited
                                                             six months    six months      12 months
                                                                  ended         ended          ended
                                                              31 August     31 August    28 February
                                                                   2018          2017           2018
                                                                      R             R              R
     Basic earnings per share                                             
     From continuing operations (cents per share)                  6.73         24.84          78.36
                                                     
     Basic earnings per share was based on earnings of R3 709 226 (2017: R13 699 935) and weighted 
     average number of ordinary shares of 55 151 000 (2017: 55 151 000).
 
                                                               Reviewed      Reviewed        Audited
                                                             six months    six months      12 months
                                                                  ended         ended          ended
                                                              31 August     31 August    28 February
                                                                   2018          2017           2018
                                                                      R             R              R
     Reconciliation of profit for the period to
     basic earnings
     Profit for the period attributable to equity holders
     of GAIA Infrastructure Capital Limited                   3 709 226    13 699 935     43 214 601
     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.
     From continuing operations (cents per share)                  6.73         24.84          78.36
 
     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 4/2018. The calculation of headline 
     earnings per ordinary share is based on the weighted average of 55 151 000 (2017: 55 151 000) 
     ordinary shares in issue during the year, and headline earnings calculated as follows:
     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.
 
                                                               Reviewed      Reviewed        Audited
                                                             six months    six months      12 months
                                                                  ended         ended          ended
                                                              31 August     31 August      31 August
                                                                   2018          2017           2018
                                                                      R             R              R
     Headline earnings per share (cents)                           6.73         24.84          78.36
     Diluted headline earnings per share (cents)                   6.73         24.84          78.36
     Reconciliation between earnings and                                                 
     headline earnings                                                                   
     Basic earnings                                           3 709 226    13 699 935     43 214 601
     Reconciliation between earnings and                                                 
     headline earnings                                                                   
     Diluted earnings                                         3 709 226    13 699 935     43 214 601
 
4.   RELATED PARTIES
     Relationships
     Common directors     GAIA Fund Managers (Pty) Limited
     Subsidiary           GAIA Financial Services (RF) (Pty) Limited
  
     GAIA Infrastructure Partners (Pty) Limited has been appointed as the Management Company ("ManCo") 
     of the Company and therefore has significant influence.
  
     GAIA Infrastructure Partners (Pty) Limited holds 1 000 shares in the Company.
  
     A management fee calculated as 0.8% of the enterprise value is paid to GAIA Infrastructure 
     Partners (Pty) Limited in quarterly instalments.
  
                                                                             Reviewed       Reviewed
                                                                           six months     six months
                                                                                ended          ended
                                                                            31 August      31 August
                                                                                 2018           2017
                                                                                    R              R
     Related-party balances
     Financial assets at fair value through profit or loss
     GAIA Financial Services (RF) (Pty) Limited                           503 739 673    511 123 029
     Amounts included in trade receivable/(trade payable) regarding
     related parties
     GAIA Infrastructure Partners (Pty) Limited                            (1 246 311)    (1 046 378) 
     GAIA Financial Services (Pty) Limited                                  1 051 799              -
     Expenses recovered from related parties
     GAIA Fund Managers (Pty) Limited                                          13 680              -
     Management fees paid to related parties
     GAIA Infrastructure Partners (Pty) Limited                             2 493 681      2 142 483
     Dividend income
     GAIA Financial Services (RF) (Pty) Limited                            10 000 000     13 282 512
     Dividend receivable from related party
     GAIA Financial Services (RF) (Pty) Limited                            14 965 446              -

 5.  GOING CONCERN
     The interim financial statements have been prepared on the basis of accounting policies 
     applicable to a going concern. This 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.
 
6 November 2018
Johannesburg

Sponsor to GAIA
Rand Merchant Bank (A division of FirstRand Bank Limited)

Company contact details
Prudence Lebina
+27 11 684 1230
prudence@gaia-ic.com     

General information
Country of incorporation            
and domicile                        
South Africa                        
                                    
Directors                           
KP Lebina (Chief Executive Officer and Interim Financial Director)
MMN Nieuwoudt (Chief Investment Officer)                 
KE Mbalo* (Chairman)                
S Tuku*                             
L Mondi*                            
N Kimber*                           
T Bukula*                           
L de Wit
C Ferreira                          
B Schabort
                          
* Independent Non-Executive
                                    
Registered office                   
3rd floor, Penthouse 5
4 The High Street
Melrose Arch
Johannesburg, 2196
                                    
Sponsor                             
Rand Merchant Bank (A division of FirstRand Bank Limited)

Bankers
FirstRand Bank Limited

Auditors
Deloitte & Touche

Transfer secretaries
Computershare Investor
Services (Pty) Limited     
Rosebank Towers
15 Biermann Avenue, Rosebank
Johannesburg, 2196

Company secretary
Fusion Corporate Secretarial Services (Pty) Limited
Unit 7, Block C
Southdowns Office Park
Karee Street, Irene
Pretoria, 0169

Company registration number
2015/115237/06

Tax reference number
9473/844/17/4

Preparer
The financial statements where compiled under Prudence Lebina's supervision.

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