Wrap Text
Unaudited Interim Results for the six month period ended 31 May2018
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 2018
The board of directors of Global (“the Board”) is pleased to present the unaudited interim results of
Global and its subsidiaries (“the Group”) for the six month period ended 31 May 2018.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
6 months 12 months 6 months
Unaudited Audited Unaudited
31 May 30 November 31 May
2018 2017 2017
R’000 R’000 R’000
Revenue 93 280 197 886 102 083
Cost of sales (68 578) (141 224) (72 649)
Gross profit 24 702 56 662 29 434
Other income 260 2 346 203
Gain due to change in control - 3 709 3 791
Operating expenses (12 902) (25 639) (12 980)
Income from operations 12 060 37 078 20 448
Investment income 1 603 1 575 57
Finance costs (12 567) (30 582) (15 372)
Profit before taxation 1 096 8 071 5 133
Taxation (319) (1 640) (692)
Profit and total comprehensive profit for the
period 777 6 431 4 441
Profit and total comprehensive profit attributable to:
Equity holders of the parent 1 534 6 968 4 633
Non-controlling interest (757) (537) (192)
Earnings per share information (Refer to note 6
for headline earnings per share information):
Basic and diluted earnings per share (cents) 2.1 10.9 8.4
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited Unaudited
31 May 30 November 31 May
2018 2017 2017
R’000 R’000 R’000
Assets
Non-current assets 455 196 476 926 507 216
Property, plant and equipment 394 923 413 643 443 922
Goodwill 37 959 37 959 37 959
Intangible asset 678 824 896
Investments in joint venture and associate 205 205 205
Loans and advances to customers 17 032 21 158 21 353
Deferred tax asset 4 399 3 137 2 881
Current assets 85 636 103 846 98 123
Trade and other receivables 40 321 41 852 39 137
Other financial assets 26 033 21 506 12 358
Cash and cash equivalents 17 903 39 428 46 355
Inventories 1 379 1 060 273
Total assets 540 832 580 772 605 339
Equity and liabilities
Equity
Share capital 96 969 96 999 97 158
Retained earnings 99 045 97 511 95 697
Shareholders’ equity 196 014 194 510 192 855
Non-controlling interest 33 265 34 022 21 434
Total equity 229 279 228 532 214 289
Liabilities
Non-current liabilities 213 516 236 723 255 623
Loans payable 165 879 192 623 209 764
Contingent consideration payable 1 321 1 321 2 551
Deferred tax liability 46 316 42 779 43 308
Current liabilities 98 037 115 517 135 427
Trade and other payables 14 375 20 269 26 159
Loans payable 80 301 90 303 104 534
Other financial liabilities 1 268 3 155 4 734
Taxation 2 093 1 790 -
Total equity and liabilities 540 832 580 772 605 339
Per share information
Net asset value per share (cents per share) 266.8 264.7 262.5
Number of shares in issue at period end (‘000) 73 481 73 481 73 481
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Audited Unaudited
31 May 30 November 31 May
2018 2017 2017
R’000 R’000 R’000
Cash flows from operating activities
Cash generated from operations 60 066 117 457 61 056
Interest income 1 603 1 575 57
Finance costs (12 567) (29 982) (15 069)
Taxation 121 1 470 (488)
Net cash generated from operating activities 49 223 90 520 45 556
Cash flows from investing activities
Property, plant and equipment additions (19 017) (8 652) (2 285)
Amount advanced to related parties (4 527) (5 579) (309)
Net cash used in investing activities (23 544) (14 231) (2 594)
Cash flows from financing activities
Proceeds of ordinary shares issued - 28 855 28 855
Proceeds from shares issued to non-controlling
shareholders of a subsidiary - 20 500 20 500
Payment of share issue expenses (30) (209) (50)
Proceeds from the disposal of partial interest in
subsidiary - 12 702 -
Repayment of loans payable (45 174) (104 562) (54 133)
Loans repaid to related parties (2 000) (2 368) -
Net cash applied in financing activities (47 204) (45 082) (4 828)
Total cash movement for the period (21 525) 31 207 38 134
Cash at the beginning of the period 39 428 8 221 8 221
Cash at end of the period 17 903 39 428 46 355
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Shareholders
Common interest before Non-
Share Control Retained non-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 2016 57 208 (6 941) 96 629 146 896 1 462 148 358
Shares issued 40 000 - - 40 000 - 40 000
Share based payments - - 1 041 1 041 - 1 041
Share issue expenses (209) - - (209) - (209)
Previously recognised losses transferred to non- controlling interest
due to change in control - - (186) (186) 186 -
Non-controlling interest arising from a change in ownership
interests that does not result in a loss of control - - - 32 911 32 911
Transfer of common control reserve to retained earnings - 6 941 (6 941) - - -
Total comprehensive income - - 6 968 6 968 (537) 6 431
Total changes 39 791 6 941 882 47 614 32 560 80 174
Balance at
30 November 2017 96 999 - 97 511 194 510 34 022 228 532
Total comprehensive income - - 1 534 1 534 (757) 777
Share issue expenses (30) - - (30) - (30)
Total changes (30) - 1 534 1 504 (757) 747
Balance at
31 May 2018 96 969 - 99 045 196 014 33 265 229 279
1. BASIS OF PREPARATION
The Board is pleased to present the Group’s unaudited results for the six month period
ended 31 May 2018. 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 2017.
The financial results have been prepared by the financial director, Mr WP Basson CA (SA).
2. INDUSTRY AND BUSINESS OVERVIEW
Global has made good progress during the period, establishing its renewable energy
businesses which focus on waste-to-energy solutions. A rising oil price has significantly
added to projected future cashflows, whereas increasing capex costs and project delays
have negatively impacted on projected returns.
Enviroprotek (Pty) Limited (“EPT”) has closed its operations in Springs and is in the process
of re-establishing its recycling reactors in Nigel, the newly acquired industrial site. The
company has used this opportunity to further enhance its process flows, and special
emphasis has been placed on the upgrading of the initial rubber recycling reactor, to be on
par with the second reactor in terms of process time and product quality. Once operational
from the beginning of September, the facility is scheduled to recycle up to 500 tons of waste
rubber per month. The carbon refinement project has achieved satisfactory results and EPT
is currently preparing commercial samples that will be distributed to its customers for testing.
Plastics Green Energy (Pty) Limited (“PGE”) has successfully concluded its pilot plant
campaign and has commenced with the construction of its commercial recycling facility in
Nigel. Oil samples of its sulphur free, high quality industrial fuel oil are currently being
prepared for customers. The waste plastic supply agreements have been finalised and
roughly 1 000 tons of feedstock have been sourced to date. Given the rise in fuel prices as
well as the current hype around the detrimental nature of plastic waste, PGE is in the ideal
position of providing an end-of-life solution to the plastics industry.
Heliosek (Pty) Limited has completed the design for its initial pilot plant to be established
during 2018. 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) Limited (“LFS”), Global’s largest subsidiary by assets,
which focuses on asset financing in the logistics sector, has deteriorated slightly. Revenue
decreased from R102 million in 2017 to R93 million in 2018 over the comparative six monthly
period from December to May. This is due to the fact that hardly any new financing deals
have been closed, since Linde Material Handling South Africa (Pty) Limited (“LMH”) had
given notice to LFS in terms of the Country Brand Agreement, under which LFS has leased
Linde forklift trucks on an exclusive basis to customers over the last 12 years. LFS has
employed additional resources to manage its second hand fleet of roughly 600 trucks
independently of LMH, and will also investigate the opportunity of funding logistics assets
from other manufacturers, as well as renewable energy assets tied to its waste to energy
businesses.
3. FINANCIAL RESULTS
Acquisition of Jabumart (Pty) Limited (“Jabumart”)
The Group acquired all the shares in issue of Jabumart for a consideration of R7.2 million.
The transaction had certain conditions precedent of which the final condition, being the
transfer of a property into Jabumart, was met on 11 December 2017. The property is used by
the Group to further develop its plastic to oil and rubber to oil pyrolysis operations.
Other than the acquisition of Jabumart as referred above, the Group did not effect any
acquisitions or disposals during the period under review.
Points of interest:
• Global recorded a profit after taxation of R0.8 million for the six months ended 31 May
2018 in spite of incurring operational and development costs on its renewable energy
businesses in the Group in line with its long term strategy.
• The net asset value per share has increased by 0.8% from 264.7 cents per share as at
November 2017 to 266.8 cents per share.
• Property, plant and equipment in the statement of financial position has decreased
because of LFS currently running down the Linde book of existing leasing assets. LFS
has commenced to employ its current funding base, systems and expertise to fund other
logistics related assets and equipment from other manufacturers on a non-exclusive
basis and the effect of this should be visible from quarter three of the current financial
period.
• Loans payable has decreased as the loans from the financial institutions financing
existing leased assets matures.
• Cash and cash equivalents decreased with the acquisition of Jabumart and the roll out
and further development of the plastic to oil and rubber to oil operations respectively.
• The gross profit margin remained consistent compared to the prior period ended
30 November 2017.
• The recoverability of trade and other debtors remained consistent compared to the
period ended 30 November 2017.
It should be noted that the current portion of other financial liabilities reflected on the
statement of financial position represents a 12-month accrual for finance associated with the
Group’s rental book. 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 on-going monthly rental
billings.
4. RELATED PARTY TRANSACTIONS
The Group’s consolidated financial statements for the year ended 30 November 2017
contains 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 2018, do not materially
deviate from the transactions as reflected in the financial statements for the year ended
30 November 2017.
5. 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 2018 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 84 570 14 610 - 3 468 (9 368) 93 280
Cost of sales (58 894) (17 178) - - 7 494 (68 578)
Gross profit 25 676 (2 568) - 3 468 (1 874) 24 702
Interest income - - 1 305 1 725 (1 427) 1 603
Interest expense (12 177) - (1 427) (390) 1 427 (12 567)
Operating expenses
and other income (5 859) - (2 231) (6 426) 1 874 (12 642)
Taxation (2 223) 747 685 472 - (319)
Profit after tax 5 417 (1 821) (1 668) (1 151) - 777
Depreciation and
impairment (31 032) - - (352) - (31 384)
Additional
information
Additions to property
plant and equipment 2 229 - 12 209 15 466 - 29 904
Investment in
associate and joint
venture - - 205 - - 205
Share of loss of
equity method
investees - - (1 768) - - (1 768)
Total segmental
assets 409 483 - 65 178 183 409 (117 238) 540 832
Segment assets 409 483 - 62 880 181 308 (117 238) 536 433
Deferred tax asset - - 2 298 2 101 - 4 399
Total segmental
liability (309 378) - (39 443) (29 509) 66 777 (311 553)
Segment liability (256 096) - (39 443) (27 554) 57 856 (265 237)
Deferred tax liability (53 282) - - (1 955) 8 921 (46 316)
Rentals and Sale of Renewable
GROUP maintenance forklifts energy Other Intergroup Total
November 2017 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 181 819 32 931 - 11 957 (28 821) 197 886
Cost of sales (130 253) (31 810) - - 20 839 (141 224)
Gross profit 51 566 1 121 - 11 957 (7 982) 56 662
Interest income - - 1 409 1 860 (1 694) 1 575
Interest expense (29 839) - (1 687) (750) 1 694 (30 582)
Operating expenses
and other income (16 192) - (7 038) (4 336) 7 982 (19 584)
Taxation (1 125) (228) 1 487 (1 774) - (1 640)
Profit after tax 4 410 893 (5 829) 6 957 - 6 431
Depreciation and
impairment (66 281) - - (171) - (66 452)
Additional
information
Additions to property
plant and equipment 71 994 - 8 131 1 116 - 81 241
Investment in
associate and joint
venture - - 205 - - 205
Share of loss of
equity method
investees - - (1 141 - - (1 141)
Total segmental
assets 456 020 - 65 959 163 108 (104 315) 580 772
Segment assets 456 020 - 62 822 163 108 (104 315) 577 635
Deferred tax asset - - 3 137 - - 3 137
Total segmental
liabilities (363 609) - (41 977) (11 340) 64 686 (352 240)
Segment liability (311 909) - (41 977) (11 340) 55 765 (309 461)
Deferred tax liability (51 700) - - - 8 921 (42 779)
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
Investment in
associate and joint
venture - - 205 - - 205
Share of loss of
equity method
investees - - (156) - - (156)
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
liabilities (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)
Project management, corporate services and any other income is below the quantitative
threshold set by IFRS for reporting.
6. 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 2018 2017 2017
Basic earnings 1 534 6 968 4 633
Adjusted for:
Impairment of property plant and equipment
(Net of taxation) - 276 -
Gain due to change in control - (3 709) (3 791)
Non-controlling interest - 352 349
Headline earnings 1 534 3 887 1 191
Per share information
Weighted average number of ordinary
shares ‘000 73 481 64 216 54 901
Basic earnings per share (cents) 2.1 10.9 8.4
Headline earnings per share (cents) 2.1 6.1 2.2
There are no instruments in issue that would cause a dilutive effect.
7. BOARD OF DIRECTORS
The current Board is constituted as follows:
Name Position/title
N Penzhorn Chief Executive Officer
WP Basson Chief Financial Officer
MCC van Ettinger Chief Operating Officer
GK Cunliffe Independent Non-Executive Chairman
AJ Naidoo Independent Non-Executive Director
GT Magomola Independent Non-Executive Director
MJ Reyneke Non-Executive Director
NB Matyolo Non-Executive Director
CJP Cilliers* Non-Executive Director
*CJP Cilliers, a representative of one of the largest shareholders, was appointed to the
Board of Directors in February 2018.
8. SHARE CAPITAL AND ISSUE/REPURCHASE OF SHARES
Global did not issue or repurchase any shares during the period under review.
9. DIVIDEND
The Company has not declared a dividend for the interim period ended 31 May 2018 (2017:
R Nil).
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 reporting date the Group does not have any contingent liabilities (2017: R Nil).
12. SUBSEQUENT EVENTS
Shareholders are referred to the announcement released on SENS on Tuesday, 5 June
2018 regarding the Company's decision to raise capital by way of a Renounceable Rights
Offer (“Rights Offer”).
In terms of the Rights Offer, Global shareholders recorded in the register at the close of trade
on Friday, 15 June 2018, were entitled to subscribe for Rights Offer Shares on the basis of
50 Rights Offer Shares for every 100 Global shares held on such date at a Rights Offer Price
of R1.83 per Rights Offer Share. The Rights Offer price was at a substantial discount to the net
asset value and tangible net asset value of 264.7 cents per share and 211.9 cents per share
respectively. Excess applications were allowed and the Rights Offer was not underwritten.
The Rights Offer closed on Friday, 29 June 2018 and 1 271 881 or 3.46% of rights offer
shares were subscribed for by existing holders.
Due to the Company requiring additional time to secure investors in lieu of two of the larger
shareholders in Global, the ARC Fund, an en commandite partnership established in South
Africa (“ARC”) has elected to not follow its rights in order to avoid triggering a mandatory
offer and will jointly pursue the investment by other parties, in order to take the waste to
energy projects forward.
There are no other major events subsequent to 31 May 2018 that require disclosure.
13. 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.
This prospects statement has not been review or audited by the Company’s auditors.
By order of the Board
GK Cunliffe N Penzhorn
Chairman Chief Executive Officer
Johannesburg
17 July 2018
Registered Office
Building 2
Clearwater Office Park
Cnr Christiaan de Wet & Millennium Boulevard
Strubensvalley
Roodepoort
1735
Directors
GK Cunliffe*#; MCC van Ettinger; N Penzhorn; WP Basson; GT Magomola*#; AJ Naidoo*#;
MJ Reyneke*; NB Matyolo*; CJP Cilliers*
* - non-executive, # - independent
Designated Advisor Transfer Office
Arbor Capital Sponsors Proprietary Limited Link Market Services Proprietary Limited
Date: 17/07/2018 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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