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Provisional Consolidated Reviewed Annual Financial Statements For The Year Ended 28 February 2018
AFRICAN DAWN CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/020520/06)
JSE code: ADW
ISIN: ZAE000060703
("the Company" or "the Group" or "Afdawn")
Provisional consolidated reviewed annual financial statements for the year ended 28 February 2018
The financial year was impacted by the following key events
- Cancellation of the Dzothe transaction after failure by the counterparty to remedy a payment breach
- Transfer of the Greenoaks property (part of discontinued operations)
- Restructure of Knife Capital and its subsequent disposal (part of discontinued operations)
- Conclusion of a settlement agreement with SARS
- Disposal of Grindstone (part of discontinued operations)
Cancellation of the Dzothe transaction by Afdawn after failure by the counterparty to remedy a payment
breach had a major impact on the strategy of the Group. (The Dzothe transaction comprised the sale of
Elite Group, African Dawn Property Transfer Finance 1 and African Dawn Property Transfer Finance 2, for
R20 million). The proceeds of the Dzothe transaction had been earmarked for a SARS settlement and
because of the cancellation, a settlement with SARS started to look unlikely. Elite Group needed funding
and the vision for the Group to become a listed venture capital entity had to be abandoned.
A settlement agreement was concluded with SARS in December 2017. The agreement is for an amount of
R8,238 million to be paid over a period of 15 months. By 28 February 2018 the Group had paid R2,58 million
and the balance outstanding at February 2018 was R5,658 million. The amount currently outstanding is
R3,06 million. This amount is to be paid by end of February 2019. Honouring the settlement agreement with
SARS has been and remains, a key focus of management. The sooner the liability is settled the sooner the
group will be able to access capital markets for funding.
The inability to provide Elite Group with additional funding has impacted negatively on growth in advances.
Knife Capital Group was restructured to make it possible to dispose of the asset management business and 50% of
Grindstone in September 2017. The remaining 50% of Grindstone has also subsequently been sold.
After the transactions mentioned, the only trading operations in the Group are Elite and YueDiligence.
Results of continuing operations
Revenue decreased by R4,855 million to R17,409 million and operating expenses increased by R1,871 million
to R31,348 million after taking the following into consideration:
- Audit fees increased by R0,125 million
- Depreciation and amortisation increased by R0,170 million
- Legal fees increased by R0,276 million
- Management and consulting fees increased by R0,368 million
- Other costs increased by R0,905 million
- Actual bad debts written off and movement in allowance increased by R4,530 million
- Rental decreased by R0,200 million
- Salaries and directors' emoluments decreased by R2,290 million
A gain of R11,809 million has been recognised following the conclusion of the settlement agreement with SARS.
Finance costs decreased by R1,446 million as liabilities were reduced.
The loss from continuing operations decreased from R7,314 million to R1,297 million
Discontinued operations
The following have been classified as discontinued operations:
- Greenoaks properties
- Knife Capital
- Grindstone
Group liabilities decreased by R31,849 million to R16,623 million mainly as a result to the successful SARS settlement agreement.
Condensed statement of Financial Position as at 28 February 2018
Notes 2018 2017
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 400 605
Goodwill 2 - 4,679
Intangible assets 3 921 3,775
Deferred tax 26 697
1,347 9,756
Current assets
Properties in possession 4 - 15,853
Trade and other receivables 5 22,851 31,193
Cash and cash equivalents 429 1,983
23,280 49,029
Total assets 24,627 58,785
Equity and liabilities
Equity
Share capital and share premium 313,943 313,943
Accumulated loss (305,825) (303,630)
Non-controlling interest 9 (114) -
8,004 10,313
Liabilities
Non-current liabilities
Deferred tax - 758
Borrowings 11 4,031 6,316
4,031 7,074
Current Liabilities
Current tax payable 10 5,705 16,280
Borrowings 11 4,259 9,475
Loans from directors 12 685 1,523
Operating lease liability 62 5
Trade and other payables 13 1,881 14,115
12,592 41,398
Total liabilities 16,623 48,472
Total equity and liabilities 24,627 58,785
Condensed statement of Profit or Loss and Other Comprehensive Income
2018 2017
Notes R'000 R'000
Restated*
Operations
Revenue 17,409 21,360
Cost of sales (116) (42)
Gross profit 17,293 21,318
Other income 1,599 1,772
Operating expenses (31,348) (29,477)
Operating loss (12,456) (6,387)
Investment income 27 30
Reduction in liability to Nexus - 2,162
Gain on SARS settlement 10 11,809 -
Deemed interest income/(expense) 433 (585)
Finance costs (1,114) (2,560)
Loss before taxation (1,301) (7,340)
Taxation 4 26
Loss from continuing operations (1,297) (7,314)
Loss from discontinued operations 14 (1,364) (4,874)
Total comprehensive loss for the year (2,661) (12,188)
Loss attributable to:
Owners of the parent: (2,614) (12,188)
Non-controlling interest in share of loss (47) -
Loss per share from operations 20 (12.1) (55.6)
Basic and diluted loss per share (c) - continued operations (5.9) (33.4)
Basic and diluted loss per share (c) - discontinued operations (6.2) (22.2)
* The prior year figures have been restated to take into account the discontinued operation and reclassification.
Refer note 14 and note 21
Condensed statement of Changes in Equity
Share Share Total Accumulated Non-
capital premium share loss control Total
capital interest equity
Group R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 March 2016 8,803 305,140 313,943 (291,442) - 22,501
Total comprehensive loss for the year - - - (12,188) - (12,188)
Balance at 28 February 2017 8,803 305,140 313,943 (303,630) - 10,313
Change in holding (refer note 6) 419 (67) 352
Total comprehensive loss for the year - - - (2, 614) (47) (2,661)
Balance at 28 February 2018 8,803 305,140 313,943 (305,825) (114) 8,004
Note(s) 9
Condensed statement of Cash Flows 2018 2017
R'000 R'000
Notes Restated*
Cash flows from operating activities
Cash generated by operations 15 6,837 4,836
Interest income - continued 27 31
Interest income - discontinued 5 53
Finance costs - excluding SARS interest on income tax - continued (1,114) (1,718)
Finance costs - excluding SARS interest on income tax - discontinued (169) (685)
Tax paid 16 (3 010) 322
Net cash from operating activities 2,576 2,839
Cash flows from investing activities
Purchase of property, plant and equipment - continued (17) (44)
Proceeds on disposal of property, plant and equipment - continued - 31
Purchase of intangible assets - continued 3 (344) (303)
Sale of subsidiary - discontinued 7 3,570 -
Proceeds from sale of equity controlled investment - discontinued 8 1,000 -
Net cash from investing activities 4,209 (316)
Cash flows from financing activities
Borrowings repaid - continued (1,337) (4,562)
Borrowings repaid - discontinued 11 (6,164) -
Finance lease payments - continued - (19)
Directors loans (repaid)/raised - continued 12 (838) 1,036
Net cash from financing activities (8,339) (3,545)
Total cash movement for the year (1,554) (1,022)
Cash at the beginning of the year 1,983 3,005
Total cash at end of the year 429 1,983
* The prior year figures have been restated to take into account discontinued operations.
Statement of compliance
These reviewed condensed provisional consolidated financial statements have been prepared in accordance with the
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, IAS 34:
Interim Financial Reporting, the Johannesburg Stock Exchange ("JSE") Listings Requirements, the requirements of
the South African Companies Act, as amended and the Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, SAICA Financial Reporting Guidelines as issued by the Accounting Practices Commitee.
Changes in accounting policies and basis of preparation
The accounting policies applied in the preparation of these financial statements are in terms of IFRS and are consistent
with those applied in the previous financial period, save for as disclosed below.
New and revised standards that are effective for annual periods beginning on or after 1 March 2017.
The following standards have been adopted during the current year
- Amendments to IAS 7: Disclosure initiative
The amendment requires entities to provide additional disclosures for changes in liabilities arising from financing activities.
Specifically, entities are now required to provide disclosure of the following changes in liabilities arising from financing
activities:
- changes from financing cash flows;
- changes arising from obtaining or losing control of subsidiaries or other businesses;
- the effect of changes in foreign exchanges;
- changes in fair values; and
- other changes.
The effective date of the amendment is for years beginning on or after 01 January 2017.
The impact of the amendment has resulted in additional disclosure.
Auditor's review
The provisional,condensed consolidated financial statements for the year have been reviewed by Grant Thornton Johannesburg Partnership
and their accompanying unmodified reviewed report which includes material uncertainties related to going concern,
is available for inspection at the Company's registered office. The Auditor's reviewed report does not necessarily
report on all of the information contained in this announcement/financial results. 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 reviewed together with the accompanying financial information from the company's registered office.
Material uncertainties related to going concern
'Without qualifying their opinion, the auditors would like to draw attention to Note 1, Going concern judgement,
in this SENS announcement which indicates the existence of material uncertainties which may cast significant
doubt on the group's ability to continue as a going concern.'
These provisional condensed consolidated financial statements were compiled by Dylan Kohler, Professional Accountant (SA),
under supervision from the financial Director, Graham Hope CA(SA).
Approval by the Board
The provisional condensed consolidated financial statements for the year ended 28 February 2018 (including comparatives)
were approved and authorised for issue by the board of directors on 29 June 2018.
Notes to the financial statements
1. Going concern judgement
The consolidated and separate 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.
The material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going
concern are outlined below.
This judgement is based on a careful consideration of the following:
- Financial statements should be prepared on a going concern basis unless it
is intended to liquidate the entity or to cease trading or there is no
realistic alternative but to do so.
- In considering whether the going concern assumption is
appropriate, all available information is taken into account,
including information about the foreseeable future.
- Where there are material uncertainties relating to events or conditions
which may cast doubt upon the ability to continue as a going concern,
those uncertainties should be disclosed.
The material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going
concern are outlined in the table below. The table also outlines the actions being taken to manage these uncertainties and
also the current status of these uncertainties and actions.
Uncertainty Action Status
Timing of the collection of The payment schedule that Agreements incorporating
R4.8 million from a long was in place and that had the restructured
outstanding debtor. failed, has been restructured arrangements have been
subsequent to year-end. concluded. The restructured
arrangement significantly
increases the likelihood of
payment by the debtor in the
next 12 months.
The ability to secure funding A non-binding Letter of The SARS settlement
for Afdawn and/or Elite. Intent has been signed with agreement has eliminated
a party that is currently the uncertainty about the
performing a due diligence SARS liability. This, coupled
to support either capital with R5.18 million of the
raising for Afdawn and/or R8.24 million settlement
secure funding for Elite or a amount having been paid by
combination of both. A the end of May 2018 is
cautionary statement in this making it possible for
regard was published on 25 management to seek a
June 2018. funding partner for Afdawn
and /or Elite.
Afdawn's ability to pay Directors and various parties Subsequent to year-end the
ongoing operational have provided and continue Directors had contributed
expenses, including the to provide funding for the another R2.05million
remaining outstanding tax payment of the SARS liability
liability amounting to and other ongoing
R5.658million at Feb 2018. operational expenses.
Management are
investigating other
opportunities for revenue
growth.
Repayment of loans Directors have, and continue Directors' ongoing support
provided by Directors in to show good faith in for the Group by means of
good faith for the payment supporting the Group and loans is acknowledged and
of the SARS liability. have no intention of calling accepted by the board.
on the loans to the
detriment of the Group.
2. Goodwill
2018 R'000
Accumulated Carrying
Cost impairment amount
Goodwill 211 (211) -
Reconciliation of goodwill Group 2018 R'000
Opening Closing
Subsidiary balance Additions Impairment Disposal balance
Knife Capital Proprietary Limited(note 8) 4,679 - (485) (4,194) -
Snapshot - 211 (211) - -
4,679 211 696 (4,194) -
Reconciliation of goodwill Group 2017 R'000
Accumulated
Cost impairment Carrying Amount
Goodwill 8,076 (3,397) 4,679
Reconciliation of goodwill Group 2017 R'000 Opening balance Impairment Closing balance
8,076 (3,397) 4,679
Goodwill impairment
Impairment test for goodwill
SME Snapshot was acquired during the year for 15% share of equity in YueDiligence in return for the underlying asset and liabilities
which were included at fair value, which gave rise to goodwill as below. The recoverable amount was based on fair value less
cost to sell, which resulted in an impairment.
Knife Capital was impaired at interim to the level that the Group would receive in terms of the Knife Disposal.
The movements are indicated below:
2018 R'000
Opening Additions Disposals Impairment Closing
Knife Capital 3,736 - (3,736) - -
Grindstone 943 - (458) (485) -
SME Snapshot - 211 - (211) -
4,679 211 (4,194) (696) -
2017 R'000 Opening Additions Disposals Impairment Closing
Knife Capital 7,133 - - (3,397) 3,736
Grindstone 943 - - - 943
8,076 - - (3,397) 4,679
3. Intangible assets
Group 2018 2017
R'000 R'000
Accumulated Accumulated
amortisation amortisation
and Carrying and Carrying
Cost impairment amount Cost impairment amount
Micro finance software* 987 (515) 472 2,030 (1,263) 767
Contractual customer contracts on
acquisition of Knife Capital - - - 6,543 (3,854) 2,689
Contractual customer contracts
YueDiligence software development 328 (121) 207 328 (9) 319
SME Snapshot software development 242 - 242 - - -
Total 1,557 (636) 921 8,901 (5,126) 3,775
* During the year intangibles with a cost of R1,249 million that were fully amortised were scrapped for nil consideration.
Reconciliation of intangible assets - Group - 2018
Business
Opening combinations Closing
balance note 6 Additions Amortisation Disposal balance
Micro finance software 767 - 206 (501) - 472
Contractual customer contracts on
acquisition of Knife Capital
Contractual customer contracts 2,689 - - (683) (2,006) -
YueDiligence software development 319 - - (112) - 207
SME Snapshot software development - 104 138 - - 242
3,775 104 344 (1,296) (2,006) 921
Reconciliation of intangible assets - Group - 2017
Opening Closing
balance Additions Amortisation balance
Micro finance software 845 274 (352) 767
Contractual customer contracts on acquisition of Knife Capital
Contractual YueDiligence software 299 29 (9) 319
5,155 303 (1,683) 3,775
Internally generated software
The software is all internally generated and was specifically developed to support the unsecured finance business model.
Contractual customer contracts on acquisition of Knife Capital can be defined as Branded education, GAP self assessment and
intervention tools, and fund management agreements.
The carrying amount and the remaining useful life of material intangible assets is defined as follows:
Intangible assets Carrying Carrying
amount Remaining amount Remaining
2018 amortisation 2017 amortisation
R'000 period R'000 period
Micro finance software 472 12 months 767 24 months
Branded education - 38 1 months
GAP self-assessment and intervention tools - 1,793 37 months
Fund Management agreements - 858 37 months
YueDiligence software development 207 23 months 319 35 months
SME Snapshot software development** 242 -
921 3,775
** SME Snapshot software development was not yet brought into use at year end and was tested for impairment.
The recoverable amount was based on fair value less cost to sell which did not result in an impairment.
4. Properties in possession
2018 2017
R'000 R'000
Almika Properties 81 Proprietary Limited, - 3,889
Greenoaks - Centurion, Gauteng - 44,415
Greenoaks - PTF3 share of property - (16,174)
- 32,130
Impairment - (16,277)
Carrying amount (refer to note 15) - 15,853
Reconciliation of movement 2018 R'000 Almika Greenoaks
Opening balance asset 280 15,573
Sold (280) (15,573)
- -
Reconciliation of movement 2017 R'000 Almika Greenoaks
Opening balance asset 5,312 44,415
Sold (1,423) -
PTF3 share of Greenoaks - (16,174)
Impairment (3,609) (12,668)
280 15,573
Almika
The final units were sold during the year.
Greenoaks
The property in possession was sold during the financial year and all third party liabilities were settled from the proceeds of
R32,500,000. The loss on the sale is summarised as below:
2018
R'000
Proceeds on sale of Greenoaks 32,500
Settlement of Nedbank bond (5,934)
Settlement of other sale costs (including items paid in prior years) (2,448)
Balance shared 24,118
PTF3 share of proceeds (8,440)
PTF2 share of proceeds (8,440)
Blue dot share of proceeds (7,260)
Loss on sale of Greenoaks (22)
5. Trade and other receivables
Trade receivables 30,291 50,672
Impairment allowance (9,288) (20,602)
Deemed interest on trade debtor (152) (585)
Deposits 286 267
VAT 10 -
Phezula (A) 418 -
Thinkroom (B) 946 -
Other receivables 340 1,441
22,851 31,193
(A) Phezula the previous owners of new subsidiary SME Snapshot were given a cash loan to assist with further development of
the software in SME Snapshot.
This loan bears interest at prime and is repayable at R50 000 per month starting May 2018 and last payment is December 2018.
(B) Thinkroom the purchaser of associate Grindstone have an agreement to settle the purchase consideration in a number of short
term installments. R800 000 is outstanding in terms of the purchase consideration and R146 000 is outstanding in terms of a
loan Grindstone pay to the Company on a monthly basis.
6. Business Combinations
Acquisition of SME Snapshot Proprietary Limited
In July 2017 the Group acquired 100% of the equity and claims in SME Snapshot Proprietary Limited through the issue of
shares in subsidiary YueDiligence Proprietary Limited. 18 new shares with a par value of R1 each were issued to
Phezulu Group Close Corporation which is 15% of the equity control of YueDiligence Proprietary Limited to
acquire control of the company. The acquisition is summarised below:
Acquisition of SME Snapshot Proprietary Limited
Fair value of net assets and liabilities acquired
Intangible assets software developed at fair value 104 -
Liabilities to owner at fair value (352) -
Net liability acquired (248) -
Outside shareholders share of liability 15% of SME Snapshot NAV 37 -
Goodwill on acquisition 211 -
Cash effect of transaction - -
Consideration at fair value (the acquisition was paid with
18 new shares of R1 in an existing subsidiary creating share premium) 352 -
The goodwill has been recognised because of synergies that will arise from including SME Snapshot into the Group.
The contribution SME Snapshot would have contributed to the group if acquired on 1 March 2017 is insignificant as it
is in start-up-phase of development.
The effect on equity can be reconciled as follows:
Consideration at fair value (the acquisition was paid with 18 new shares of R1 in an existing subsidiary
creating share premium) 352
15% of Net Asset Value of YueDiligence at acquisition given up 30
Outside shareholders share of liability 15% of SME Snapshot NAV 37
419
7. Subsidiary disposal
Knife Capital Proprietary Limited disposal
During August 2017 the board decided to restructure Knife Capital. On 1 Sep 2017 the Group disposed of 100% of the equity
interest in Knife Capital for R3,625 million in cash. This included the 50% shareholding held by Knife Capital in
Grindstone after restructure. The terms were outlined in the SENS issued on 25 August 2017.
Net cash flow effect of disposal of Knife Capital Group
Property, plant and equipment 44 -
Intangible assets on contracts (refer to note 3) 2,006 -
Goodwill (refer to note 2) 4,194 -
Deferred tax asset 111 -
Trade and other receivables 588 -
Group loans transferred to third parties 329 -
Cash and cash equivalents 55 -
Share of SME Snapshot transferred to holding company (37)
Trade and other payables (1,346) -
Carrying value of assets and liabilities disposed 5,944
Total assets sold less subsidiary acquired/investment at carry value Knife Capital (5,944) -
Fair Value of associate restructured from subsidiary 1,893 -
Proceeds on sale of Knife Group 3,625 -
Loss on sale and change in control (426) -
Cash given up on sale (55) -
Cash received on sale 3,625 -
Cash flow movement on sale of Knife Capital 3,570 -
8. Restructure and disposal of associate
Grindstone which was a 100% held subsidiary of Knife Capital at the beginning of the year was restructured on 31 August 2017
to be 50% held by Afdawn and 50% by Knife Capital. On 1 September 50% of the equity of Grindstone was sold as part of the
sale of Knife Capital (refer to note 7) and the remaining 50% was treated as an investment in associate till it was sold in
January 2018. The movement is reconciled as below:
Transfer from subsidiary to associate at fair value 1 Sep 2017 (1,893) -
Loss for the period September to December 2017 equity accounted 156 -
Carrying value of associate/investment (1,737) -
Sale price on sale of associate 1,946 -
Profit on sale of associate 209
Sale price on sale of associate 1,946 -
Portion of sales price included in trade debtors (946) -
Cash related to sale of equity instrument 1,000 -
9. Non-controlling interest
The non-controlling interest arose from the acquisition of subsidiary SME Snapshot. The acquisition was paid for with 18 shares
of YueDiligence Proprietary Limited creating a non-controlling interest. The summary of the outside shareholders is as
below:
15% of Net Asset Value of YueDiligence at acquisition given up (30) -
15% of losses since acquisition of YueDiligence attributable to non-controlling interest (47) -
15% of losses since acquisition of SME Snapshot attributable to non-controlling interest (37) -
Non-controlling interest at year end (114) -
10. Current tax payable
Current tax payable (5,705) (16,280)
A settlement agreement was reached with SARS in December 2017 the terms of which are summarized below:
- Various penalties and interest on Income Tax and Vat were reversed in Afdawn Limited and several
subsidiaries with outstanding balances. Accrual raised for interest and penalties were reversed as follows: Income
Tax of R7,757 million and VAT of R4,052 million.
- Afdawn Capital Limited and subsidiaries that were part of the settlement with assessed income tax losses accumulated
to 2017 would be forfeited.
- An installment plan was set out for the settlement of all the outstanding tax balances and will be paid by the end
of February 2019.
11. Borrowings
GROUP 2018 R'000 Loan Balance
HT Malan 100
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
ME Malan 100
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
JP Verwey 180
The loan bears interest at prime, is secured on ceded debtors and is repayable over 3 months.
PS Van Der Westhuizen -
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
National Housing Finance Corporation ("NHFCE") - 128
The facility is secured by the associated debtors, bears interest at prime + 5% and is repayable over 5 years
from the borrowing date. African Dawn Capital Limited has provided a guarantee on the loan facility. Elite has
drawn down less than the amounts permitted in terms of the contract. This was settled in April 2018
Sandown Capital loan (A) 2,648
Interest is charged at prime +1%, currently 11.25% per annum. Capital repayments of R1,950 000 will be made during the 2019
financial year amounting to an average of R162,500 per month with R698,000 being repayable during the 2020 financial year.
Interest is paid together with the monthly capital repayments as they fall due. The loan is unsecured.
Sandown Capital Interest loan (C) 3,333
Interest is charged at prime +1%, currently 11.25% per annum. Capital repayments will commence once the Sandown Capital
Loan (A) has been settled during the 2020 financial year. Capital repayments of R2,902 000 will be made during the
2020 financial year amounting to an average of R242,000 per month with R431,000 being repayable during the 2021
financial year. Interest is accrued and paid on a monthly basis. The loan is unsecured.
GC Oosthuizen - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 387
months.
M Springer - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 150
CPA Peyper - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 100
DJC Beukes - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 200
JC Breedt - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 350
C Lacante - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 30
C Stoop - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 185
Makalu Capital - The loan bears interest at prime, is unsecured and is repayable over 6 months. 399
Nedbank mortgage bond - The loan was settled during the year in terms of the sale of property in -
possession. 8,290
GROUP 2017 R'000 Loan Balance
DD Breedt 300
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
HT Malan 200
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
ME Malan 200
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
JP Verwey 160
The loan bears interest at prime, is secured on ceded debtors and is repayable over 3 months.
PS Van Der Westhuizen 100
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
National Housing Finance Corporation ("NHFCE") - 1,436
Elite entered into a separate facility agreement whereby the loan is secured on the associated debtors, bears
interest at prime +5% and is repayable over 5 years from the borrowing date. Afdawn has provided a
guarantee on the loan facility.
Sandown Capital loan (A) - The convertible bond was not converted and new terms are as follows: 3,898
Loan bears interest at prime +1% currently 11.5% and is repayable in installments of R100,000 for 3 month and
then R125,000 thereafter. The loan is unsecured.
Sandown Capital Interest free portion loan (C) - The loan bears interest at prime current 10.5% +1 and is
repayable in instalments of R700,000 starting in December 2016. The loan is unsecured. 3,333
Nedbank mortgage bond - The loan is secured on fixed property. Interest is levied at prime -0.5% and the 6,164
loan
Is repayable in instalments of R172,932 per month. The bond arose as part of a property in possession
transaction. The monthly instalments are funded through the cash generated through operations at
Greenoaks.
15,791
2018 2017
Non-current liabilities R'000 R'000
At amortised cost 4,031 6,316
4,031 6,316
Current Liabilities
At amortised cost 4,259 9,475
4,259 9,475
8,290 15,791
(A) + (C) The loan arose from a convertible bond raised in 2011 that was the converted into 2 loans:
(A) This loan is repayable in monthly instalments from the conversion date and attracts interest as indicated.
(C) This loan was initially interest free and had repayment terms starting in 2018. Subsequently the loan has started
attracting interest as indicated which is paid monthly and the capital portion is to be repaid starting in 2019.
Sandown loans (A) & (C) were renegotiated during the year and the repayment terms and interest rates were updated
in April 2017 as indicated below each loan.
12. Loans from directors
2018 2017
R'000 R'000
EA Van Heerden * - 20
JK Van Zyl * - 20
A Bohmert * - 20
WJ Groenewald ** 100 183
G Hope ** 585 1,280
685 1,523
*The loans arose as part of the Knife Capital Group acquisition transaction detailed in the circular issued on 7 March 2014.
The loans were fully settled during the current year.
** All loans attract interest, are unsecured and are repaid on an adhoc basis in the short term.
Non-current liabilities - -
Current liabilities (685) (1,523)
(685) (1,523)
13. Trade payables
Trade payables 645 2,523
VAT * 176 4,703
Accrued leave pay 916 1,206
Accrued expenses 144 2,067
Deposit paid on sale of Greenoaks and Elite - 2,000
Directors unpaid salaries - 1,233
Deposits received - 383
1,881 14,115
* R4,052 million of the outstanding VAT in African Dawn Capital Limited was reversed by SARS subject to the terms SARS
settlement.
14. Discontinued operations
During the 2018 financial period management decided to restructure the Knife Capital to assist with the group liquidity.
The sale of Knife Capital was concluded by 1 September 2017 as announced on SENS. The sale of the remaining 50% of
Grindstone was concluded in January 2018. Also included in the discontinued operations is the income relating to the
rental property Greenoaks which was disposed and transfered in May 2017 as indicated in note 4. (referred to as the
Candlestick Transaction) As the decision to sell and sale happened in the same period the effect on the statement of
profit and loss is treated as a discontinued operation as below.
Total discontinued operations
2018 2017
R'000 R'000
Revenue 3,281 14,727
Cost of sales (15) (324)
Other income - 519
Operating expenses (3,084) (14,033)
Operating profit 182 889
Investment revenue 5 53
Impairment of property in possession - (971)
Depreciation on property, plant and equipment (21) (48)
Finance costs (169) (685)
Amortisation of intangible asset (684) (1,321)
Impairment of goodwill (485) (3,397)
Loss before tax (1,172) (5,480)
Tax 181 606
Loss for the year from discontinued operations (991) (4,874)
Equity loss on associate discontinued (156) -
Loss on sale of Knife Capital (426) -
Profit on sale of Grindstone 209 -
Comprehensive loss for the year from discontinued operations (1,364) (4,874)
Discontinued cash flows from operations 16,846 3,152
Discontinued cash flows from investing activities 4,570 -
Discontinued cash flows from financing activities (6,164) (1,400)
Investment
advisory and Rentals of
investment properties in
Discontinued operations per segment 2018 R'000 management possession Total
R'000 R'000 R'000
Revenue 2,106 1,175 3,281
Cost of sales (15) - (15)
Other income - - -
Operating expenses (1,512) (1,572) (3,084)
Operating profit/(loss) 579 (397) 182
Investment revenue 2 3 5
Depreciation on property, plant and equipment (17) (4) (21)
Finance costs - (169) (169)
Amortisation of intangible asset (684) - (684)
Impairment of goodwill (485) - (485)
Loss before tax (605) (567) (1,172)
Tax 191 (10) 181
(Loss) for the year from discontinued operations (414) (577) (991)
Equity loss on associate discontinued (156) - (156)
Loss on sale of Knife Capital (426) - (426)
Profit on sale of Grindstone 209 209
Comprehensive loss for the year from discontinued operations (787) (577) (1,364)
Investment advisory Rentals of
and investment properties in
Discontinued operations per segment 2017 R'000 management possession Total
R'000 R'000 R'000
Revenue 9,974 4,753 14,727
Cost of sales (324) - (324)
Other income 35 484 519
Operating expenses (11,031) (3,002) (14,033)
Operating profit/(loss) (1,346) 2,235 889
Investment revenue 23 30 53
Impairment of property in possession - (971) (971)
Depreciation on property, plant and equipment (44) (4) (48)
Finance costs - (685) (685)
Amortisation of intangible asset (1,321) - (1,321)
Impairment of goodwill (3,397) - (3,397)
(Loss)/profit before tax (6,085) 605 (5,480)
Tax 800 (194) 606
(Loss)/profit for the year from discontinued operations (5,285) 411 (4,874)
15. Cash used in operations
Loss before taxation continued and discontinued operations
(2,846) (12,820)
Adjustments for:
Depreciation - continued 157 234
Depreciation -discontinued 21 48
Loss on disposal of property in possession/ property, plant and equipment - continued - 5
Loss on disposal of property in possession/ property, plant and equipment -
discontinued 22 -
Investment income - continued (27) (31)
Investment income - discontinued (5) (53)
Finance costs - continued 1,114 1,718
Finance costs - discontinued 169 685
Loss on sale of Knife Capital - refer to note 7 426 -
Profit on sale of associate - refer to note 8 (209) -
Impairment goodwill - Non cash - continued 211
Impairment goodwill - Non cash - discontinued 485 3,397
Non-cash finance costs (penalties and interest on income tax and vat) - continued (11,809) 842
Reduction in Nexus liability - Non cash - continued - (2,162)
Amortisation (refer to note 3) - continued 610 362
Amortisation (refer to note 14) - discontinued 684 1,321
Deemed interest expense - continued (433) 585
Operating lease movement - continued 58 (23)
Impairment of properties in possession - discontinued - 971
Changes in working capital:
Properties in possession - discontinued 15,831 1,422
Trade and other receivables 9,213 4,204
Trade and other payables (6,835) 3,819
Other financial assets
- 312
6,837 4,836
16. Tax paid
Balance at beginning of the year (16,280) (15,054)
Current tax for the year recognised in profit or loss discontinued (181) (66)
Current tax recognised for prior year profit or loss continued 4 4
Adjustment in respect of penalties and interest raised (15) (842)
SARS liability settlement reduction reversal penalties and interest 7,757 -
Balance at end of the year 5,705 16,280
(3,010) 322
17. Events after reporting period
Reversal of acquisition of SME Snapshot
Shareholders are hereby advised that on 22 May 2018, the Company and YueDiligence entered into a further sale and
settlement agreement with SME Snapshot, the Seller and Tyronne Clinton Nel, in terms of which the parties agree to
unwind the Transaction through the disposal by the Seller of the YueDiligence Shares to YueDiligence and the disposal
by YueDiligence of the SME Snapshot Equity to the Seller.
As a result of the Disposal, YueDiligence will not be required to develop and roll out the product offerings of
SME Snapshot. The Disposal will enable YueDiligence to focus solely on the roll out of its interactive web-based Gap
Analysis Tool as a product offering to entrepreneurs, funders and consultants to assist them to identify growth gaps
and help create sustainable entities that will attract funding for growth.
Capital Raising
A non-binding Letter of Intent has been signed with a party that is currently performing a due diligence to support
either capital raising for Afdawn and/or secure funding for Elite or a combination of both. A cautionary statement
in this regard was published on 25 June 2018.
Material debtor
Agreements incorporating the restructured arrangements have been concluded. The restructured arrangement significantly
increases the likelihood of payment by the debtor in the next 12 months.
18. Segment report
The segment information has been prepared in accordance with IFRS 8 - Operating Segments which defines the
requirements for the disclosure of financial information of an entity's operating segments. IFRS 8 requires
segmentation based on the group's internal organisation and reporting of revenue and operating income based upon
internal accounting methods.
The group discloses its operating segments according to the components regularly reviewed by the chief operating
decision-makers, being the executive directors. These amounts have been reconciled to the consolidated financial
statements. The measures reported by the group are in accordance with the accounting policies adopted for preparing
and presenting the consolidated financial statements. Segment revenue excludes value added taxation and includes
inter- segment revenue which is R0,192 million (2017: 1,515). Net revenue represents segment revenue from which
intersegment revenue has been eliminated. Sales between segments are made on a commercial basis. Segment
operating profit before capital items represents segment revenue less segment expenses. Segment expenses consist of
operating expenses. Depreciation, amortisation and impairments have been allocated to the segments to which they relate.
The segment assets comprise all assets of the different segments that are employed by the segment and that are either
directly attributable to the segment, or can be allocated to the segment on a reasonable basis.
The group's reportable segments are based on the following lines of business:
a. Investment advisory and investment management
This segment consists of the YueDiligence, Knife Capital and Grindstone. Knife Capital and Grindstone were sold
during the financial period, so transactions related to them are treated as discontinued operations. YueDiligence
provides investment advisory and investment management services to entrepreneurial and innovative companies.
b. Micro finance
This segment consists of Elite and Elite Two. These companies are involved in micro finance in the unsecured lending
industry and have a wide base of customers (mostly individuals).
c. Rentals of properties in possession
This segment consists of a residential complex with 76 units (a mix of 2 and 3 bedrooms), that are rented out on annual
leases to individuals. The property was sold during the financial period so the segment is treated as discontinued.
d. Other
Other consists of the holding company together with other smaller entities not dealt with in other
segments. Segment information has been restated to comply with the segments identified above.
All the segments operate only in South Africa, largely in the Gauteng and Western Cape provinces therefore no
geographical information is provided. Similarly all non-current assets are in South Africa.
2018 Group Investment
advisory and Rentals of
investment Micro properties in
management finance possession Other
R'000 R'000 R'000 R'000 Total R'000
Revenue 172 17,248 - (11) 17,409
Cost of sales 116 10 - (10) 116
Other income - 373 - 1,226 1,599
Investment income 19 8 - - 27
Finance costs 5 1,138 - (29) 1,114
Operating expenses
518 20,708 - 10,122 31,348
Impairment trade and other receivables - (7,718) - (3,596) (11,314)
Bad debts actually written off - 12,249 - 7,710 19,959
Gain on SARS settlement - - - 11,809 11,809
Deemed interest - - - 433 433
Depreciation and amortisation 109 622 - 38 769
Profit/(loss) before taxation (449) (4,228) - 3,376 (1,301)
Taxation - (4) - - (4)
Discontinued operations (787) - (577) - (1,364)
Total comprehensive (1,236) (4,224) (577) 3,376 (2,661)
Segment total assets 977 17,804 53 5,793 24,627
Segment total liabilities 329 9,641 46 6,607 16,623
Intangible assets acquired 241 206 - - 447
Goodwill acquired 211 - - - 211
Property, plant and equipment acquired - 17 - - 17
2017 Group Investment Rentals of
advisory and properties
investment Micro in
management finance possession Total
R'000 R'000 R'000 Other R'000 R'000
Revenue external 3 21,361 - 900 22,264
Cost of sales 42 - - - 42
Other income - 788 - 80 868
Investment income - 29 - 1 30
Finance costs - 1,434 - 1,126 2,560
Operating expenses 62 21,163 - 8,252 29,477
Impairment trade and other receivables
(refer to note 5) - 1,344 - 130 1,474
Bad debts actually written off - 2,641 - - 2,641
Deemed interest expense - - - 585 585
Depreciation and amortisation 9 527 - 59 595
Reduction of liability to Nexus liquidator - 2,162 - - 2,162
Profit/(loss) before taxation (101) 1,402 - (8,641) (7,340)
Taxation 26 - - - 26
Profit/(loss) after taxation (75) 1,402 - (8,641) (7,314)
Discontinued operations (5,285) 411 (4,874)
Total comprehensive (5,360) 1,402 411 (8,641) (12,188)
Segment total assets 1,766 23,665 16,902 16,452 58,785
Segment total liabilities 1,581 11,692 8,334 26,865 48,472
Intangible assets acquired 30 274 - - 304
Goodwill - - - 4,679 4,679
Property, plant and equipment acquired - 44 - - 44
19. Guarantees
The company has provided a guarantee to National Housing Finance Corporation for a loan facility of R25 million
provided to Elite. The outstanding balance on the loan as at 28 February 2018 was R0.128 million (2017 R1.4 million).
In terms of the guarantee Afdawn will assume responsibility for the loan if Elite defaults on the loan.
20. Loss per share
Basic loss per share
Basic loss per share are calculated by dividing the loss attributable to equity holders of the company by the weighted
average number of ordinary shares in issue during the year excluding ordinary shares held as treasury shares.
Basic and diluted loss per share
2018 2017
C c
From continued operations (c per share) (5.9) (33.4)
From discontinued operations (c per share) (6.2) (22.2)
Reconciliation of loss for the year to basic loss (12.1) (55.6)
Loss from continued operations (1,297) (7,314)
Loss from discontinued operations (1,364) (4,874)
Basic loss per share (2,661) (12,188)
Reconciliation of weighted average number of ordinary shares used for basic loss per share and headline and diluted
headline loss per share
2018 2017
'000 '000
Number of ordinary shares in issue 21,925 21,925
Weighted average number of shares used for loss and headline loss per share 21,925 21,925
Headline loss per share
2018 2017
c c
Headline loss per share continued operations (c) (5.0) (33.4)
Headline loss per share discontinued operations (c) (2.9) (6.7)
Headline loss per share (c) (7.9) (40.1)
Headline loss from continued operations 2018 R'000
Gross Tax Net
Loss from continued operations (1,301) 4 (1,297)
Impairment of goodwill 211 - 211
Headline loss from operations (1,090) 4 (1,086)
Gross Tax Net
Headline loss from discontinued operations 2018 R'000
Loss from discontinued operations (1 545) 181 (1 364)
Loss on sale of Knife Capital 426 - 426
Profit on sale of associate (209) - (209)
Impairment of goodwill 485 485
Loss on disposal of property in possession/ property, plant and
equipment - discontinued 22 22
Headline loss from discontinued operations (821) 181 (640)
Headline loss continued operations 2017 R'000
Gross Tax Net
Loss from continued operations (7,146) (168) (7,314)
Profit on disposal of property, plant and equipment 5 (1) 4
Headline loss from operations (7,141) (169) (7,310)
Headline loss discontinued operations 2017 R'000
Gross Tax Net
Loss from discontinued operations (5,480) 606 (4,874)
Impairment of goodwill 3,397 - 3,397
Headline loss from discontinued operations (2,083) 605 (1,477)
21. Prior period re-classification error
A portion of the non-refundable deposit relating to the cancelled sale of Elite was incorrectly recognised as revenue
in the prior year and has been re-classified to other income.
The effect of the reclassification on the statement of comprehensive income is indicated below:
Group 2017 R'000
Discontinued
As originally Operations (refer
stated to note 14) Reclassification Now stated
Revenue 36,991 (14,727) (904) 21,360
Gross profit 36,625 (14,403) (904) 21,318
Other income 1,387 (519) 904 1,772
Administration
Company secretary
A Rich(on behalf of Statucor Proprietary Limited)
Registered office
3RD Floor, The Village at Horizon,
Corner of Sonop and Ontdekkers Roads,
Horizon View,
1724,
Gauteng
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street,
Johannesburg
2001
Designated Advisor
PSG Capital
Tel: +27 (12) 914 5566
Date 29 June 2018
Date: 29/06/2018 04:30:00 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.
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