1. GAM’s total invoicing in this year’s third quarter is up by 3% in comparison to last quarter. The company is again making profit.
GAM’s level of accumulated sales rose to €213.5 million, thus confirming the company’s recent projection of stability in overall trend levels of activity. Total level of sales is in line with the company’s internal budget. The company’s level of activity is again predictable.
In the third quarter, standardized EBITDA rose to €20.8 million compared to a corresponding €20.2 million (+2.4%) as reported in the second quarter. Based on accumulated figures, standardised EBITDA rose to €67.2 million thus representing a margin of 31.5% over total invoicing.
Following three consecutive quarters of losses, GAM has closed the third quarter making profit.
Results in the third quarter have boosted those of the second by no less than €4.6 million, thereby reducing the impact of accumulated loss from the previous quarters to a total of €6.1 million.
Profit and Losses 1Q2009 2Q2009 3Q2009 Acum. 2009
Sales 74,603 68,404 70,459 213,466
Growth - -8.3% 3.0%
EBITDA Normalise 26,115 20,265 20,844 67,224
Growth - -22.4% 2.8%
Net Results -2,127 -4,267 286 -6,107
2. As maintained throughout 2009, GAM continues to dedicate itself to the optimization of cash flow and overall reduction in debt level. By September of the year in session, the company generated cash flow of 103 million before debt repayments and investments.
At the close of the third quarter, the company has generated a cash flow level of €103 million (before debt repayment and investments.) As a result of this, Gross Debt has been reduced by €72.2 million from the level reported at the close of 2008. Net Debt at the close of the third quarter stands at €561.6 million, i.e. €92 million below the maximum level reached thirteen weeks ago (in August 2008) of €654 million. From this same date, the value of company liquid assets has increased to €44.4 million.
The evolution observed in each different debt category is detailed in the following grid:
Dic. 2008 Jun. 2009 Sept. 2009
Machinery associated debt 401 355 355
Debt formed fundamentally from
Acquisitions 103 106 103
Convertible Bond 112 101 77
Other debts (Commercial/ Loans) 36 48 45
GROSS DEBT 652 610 580
Cash and Equivalent -41 - 40 -18
NET DEBT 611 570 562
The company’s record of payment collection remains in line with company projections, reporting an average days of sales outstanding (DSO) of 144 days. Level of sales’ debt has risen at the close of the third quarter to 146 million Euros, only 4 million greater than in June 2009. The company remains very pro-active in managing the level of risk in sales as well as ensuring a stable level of insolvencies.
Throughout the current quarter, GAM has repurchased a notional value of 41.7 million Euros in convertible bonds, issued in year 2007. This repurchase was made taking on an average price of 48%, thereby generating a financial income of 25 million Euros and outgoing cash of €20 million. The transaction has generated a reversion in issue expenses composed of repayments of 1.3 million Euros per year.
Accumulated figures from the month of September reported an income of 11.1 million Euros in sales of used machinery. Sales have been undertaken with an acute focus on profit optimization and have brought about gross profit of 4.4 million Euros which, in turn, represents a net tax margin of approximately 20%.
3. In the process of restructuring its overall debt level, the company has added more financial entities to its debt reschedule agreement reached in July 2009 thus bringing the percentage to 78.6% of the company’s total.
These supports have allowed the company to defer its debt repayment until 2009 and 2010, subscribing 69.9 million to the former and 65.2 to the latter. If we then add to this, the various Credit Lines negotiated for a three year period which together result in a total of 26 million in financing, the total amount of deferred debt stands at 161.8 million Euros.
GAM continues to negotiate new incorporations with more financial entities, which represent 7.1 % of the company’s total debt level.
3. Moreover, the company continues to focus fully on its Cost Reduction Programme in the aim of achieving a monthly total in recurrent operating costs of 16 million Euros.
Cut backs in ordinary running expenses have brought about a reduction of 10% compared to the same level reported in the third quarter of the previous year. Cut backs have brought about a reduction in ordinary running expenses from €165.1 million, as reported in the first nine months of 2008, to €148.40 million in 2009. This achievement in cost reduction has therefore allowed for a restructuring of costs and savings of €16.7 million since the cutting cost programme was launched, to the present quarter.
The fall in interest rates, as well as the reduction in company debt level, have allowed for a considerable reduction in financial costs, observing them fall from the 3.4 million Euros accrued in January to the €1.9 million corresponding to the month of September.
Taking all savings into account, the company has been successful in lowering the level of recurring and annual expenses by €34.4 million in the first nine months of the fiscal year. Said in other words, the company has already achieved 70% of its goal for 2009 to reduce such costs by a total of €50 million.
5. And finally, GAM continues to dedicate itself fully to its diversification and internationalisation projects. Total invoicing from international markets has increased by 25% in comparison to the total invoiced in the same quarter of the previous year.
These projects were launched in early 2008 and represent the company’s main levers for growth. In this manner, the company’s subsidiaries in Peru and Panama are at this time fully up and running. International invoicing has increased by 25% thus confirming the company’s projected success with its expansion into new markets with huge potential for growth in the development of its infrastructures.
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