Wrap Text
Reviewed results for year ended February 2014
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"
Reviewed Condensed Consolidated Statements of Financial Position for the
year ended 28 February 2014
Year ended Year ended
28-Feb-14 28-Feb-13
R'000 R'000
(Reviewed) (Audited)
Non-current assets 92 3,329
Property, plant and equipment 92 899
Intangible assets - 1,792
Other financial assets - 638
Current assets 45,424 114,084
Property in possession 24,748 21,335
Other financial assets - 300
Current tax receivable 95 95
Trade and other receivables 149,619 208,815
Impairment on trade receivables (130,122) (125,475)
Net trade and other receivables 19,497 83,340
Cash and cash equivalents 1,084 9,014
Non-current assets held for sale 59,766 4,129
Total assets 105,282 121,542
Capital and reserves 43,411 63,251
Share capital 284,634 284,634
Accumulated (loss) (241,223) (221,383)
Non-current liabilities 8,844 22,682
Borrowings 8,844 22,366
Finance lease obligation - 316
Current liabilities 32,492 35,609
Finance lease obligation - 77
Operating lease obligation 174 195
Borrowings 7,893 7,292
Current tax payable 18,226 18,709
Trade and other payables 6,198 9,336
Bank overdraft 1 -
Liabilities of disposal group 20,535 -
Total liabilities 61,871 58,291
Total equity and liabilities 105,282 121,542
Net asset value per share (cents) 8.54 12.5
Net tangible asset value per share (cents) 8.54 12.2
Reviewed Condensed Consolidated Income Statement for the year ended 28
February 2014
Year ended Year ended
28-Feb-14 28-Feb-13
R'000 R'000
(Reviewed) (Audited)
Revenue 6,079 6,458
Cost of sales - 142
Gross profit 6,079 6,600
Other income 34 570
Operating and other expenses (21,474) (10,654)
Operating loss (15,361) (3,484)
Investment revenue 77 553
Loss on sale of non-current assets held for sale (311) -
Finance cost (1,124) (1,175)
(Loss) before taxation (16,719) (4,106)
Taxation (407) (166)
(Loss) from continuing operations (17,126) (4,272)
Profit/(Loss)from discontinued operations (2,714) 2,162
(Loss) for the year (19,840) (2,110)
Weighted number of shares 508,184 508,184
Basic (loss) per share total (3.90)c (0.41)c
Basic (loss) from continuing operations (3.37)c (0.83)c
Basic (loss) from discontinued operations (0.53)c 0.42c
Diluted (loss) per share from continuing operations (3.37)c (0.84)c
Headline (loss) per share total (3.14) (0.40)c
Headline (loss) per share from continuing operations (2.61)c (0.82)c
Headline (loss) per share from discontinued
operations (0.53)c 0.42c
RECONCILIATION OF HEADLINE (LOSS)
Basic profit (19,840) (2,110)
Non-recurring adjustments
Impairment of property, plant and equipment and
non-current assets held for sale 3546 110
(Profit)/loss on disposal of property, plant
equipment 1 (24)
Loss on disposal of non current asset
held for sale 311 -
Headline (loss) (15,982) (2,024)
Reviewed Condensed Consolidated Statements of Comprehensive Income for the
year ended 28 February 2014
Year ended Year ended
28-Feb-14 28-Feb-13
R'000 R'000
(Reviewed) (Audited)
(Loss) for the year (19,840) (2,110)
Other comprehensive income:
Total comprehensive income (19,840) (2,110)
Attributable to
(Loss) from continuing operations (17,126) (4,272)
(Loss)/Profit from discontinuing operation (2,714) 2,162
Owners of the parent (19,840) (2,110)
Non-controlling interest - -
Reviewed Condensed Consolidated Statements of Changes in Equity for the year
ended 28 February 2014
Share Share Total Accumulated Ordinary
Capital Premium Reserves Loss Share
Holders
Equity
Balance at 29 Feb 2012 5,074 279,560 97 (219,370) 65,361
Total comprehensive loss
for the 2013 year - - - (2,110) (2,110)
Transfer to insurance reserve - - (97) 97 -
Balance at 28 Feb 2013 5,074 279,560 - (221,383) 63,251
Total comprehensive loss
for the 2014 year - - - (19,840) (19,840)
Balance at 28 Feb 2014 5,074 279,560 - (241,223) 43,411
Reviewed Condensed Consolidated Statements of Cash Flows for the year ended
28 February 2014
Year ended Year ended
28-Feb-14 28-Feb-13
R'000 R'000
(Reviewed) (Audited)
Cash flow from operating activities (10,448) (6,020)
Cash flow from investing activities (1,393) (2,443)
Cash flow from financing activities 3,910 2,026
Net cash flow for the year (7,930) (6,437)
Cash and cash equivalents at
beginning of the year 9,014 15,451
Cash and cash equivalents at
end of the year 1,084 9,014
Basis of preparation and statement of compliance
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS"),the Companies Act, and the JSE
Listing Requirements and the SAICA Financial Reporting guides as issued by
the Accounting Practice Committee and Financial Reporting Pronouncements as
issued by Financial Reporting Standards Council. The consolidated financial
statements are prepared in accordance with the going concern principle under
the historical cost basis other than financial assets designated as at fair
value through profit and loss. The preparation of financial statements in
conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the group's accounting policies. The preparation of the
group's consolidated year end results for financial year ended 28 February
2014 was supervised by the Financial Director of the group appointed
27 March 2014, Mr. E.A. Van Heerden.
These results have been reviewed by the group's independent auditors, Grant
Thornton. Their unmodified review conclusion is available for inspection at
the registered offices of the group. The auditor's report does not
necessarily cover all of the information contained in this announcement.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors work, they should obtain a copy
of that report together with the accompanying financial information from the
registered offices of the group. Any reference to future financial
performance included in this announcement, has not been reviewed or reported
on by the group's independent auditors.
Notes to the Reviewed Condensed Consolidated Financial statement
1. Reporting entity
African Dawn Capital Limited is a public company incorporated and domiciled
in the Republic of South Africa, with its registered office situated at: 1st
Floor, Quadrum 4, Quadrum Office Park, 50 Constantia Boulevard, Constantia
Kloof. African Dawn Capital Limited's shares are listed on the Alt-X of the
JSE Limited ("JSE"). The core business of African Dawn Capital is
specialized financial services segmented as bridging finance, personal short
term unsecured finance and other financial services, including debt
collections and debt management services. The financial statements for the
year ended 28 February 2014 comprise the company and its subsidiaries. The
operating results of the company and group are set out in the attached
statement of financial position, income statement, statement of
comprehensive income, statement of changes in equity, statement of cashflow
and the explanatory notes.
2. Significant accounting policies
The accounting policies adopted in the preparation of the consolidated
financial information are consistent with those of the annual financial
statements for the year ended 28 February 2014.
Policies that became effective in 2014 and adopted include:
Amendments to IFRS 7 Disclosure to Financial Instruments
IFRS 10 Consolidated financial Statements
IFRS 11 Joint arrangements
IFRS 12 disclosure of interest in other entities
IFRS 13 Fair value measurement
IAS 27 Separate financial statements
IAS 32 Offsetting financial assets and financial liabilities
- IAS 1 Presentation of financial statements
Below is an extract of the most significant accounting policies of the
Group.
Discontinued operations
A discontinued operation is a component of the Group that either has been
disposed of, or is classified as held for sale, and represents a separate
major line of business or geographical area of operations.
A discontinued operation is part of a single co-ordinated plan to dispose of
a separate major line of business or geographical area of operations or is a
subsidiary acquired exclusively with view to resale.
The profit or loss from discontinued operations, including prior years
components of profit or loss, is presented in a single amount in the income
statement.
Financial Instruments - Compounded financial instruments
If the terms of convertible instrument give rise to a non derivative
instrument containing both liability and equity components, they are treated
as compound financial instruments. The liability component of a compound
financial instrument is recognised initially at the fair value of a similar
liability that does not have an equity conversion option. The equity
component is recognised initially as the difference between the fair value
of the compound financial instrument in its totality and the fair value of
the liability component. Any directly attributable transaction costs are
allocated to the liability and equity components in proportion to their
initial carrying amounts. Subsequent to initial recognition, the liability
component of a compound financial instrument is measured at amortised cost
using the effective interest method. The equity component of a compound
financial instrument is not re-measured subsequent to initial recognition,
only derecognized on conversion or settlement.
Revenue
Revenue recognition comprises the fair value of the received or receivable
consideration for the sale of goods and services, net of value added tax,
rebates and discounts and after eliminating sales within the group. Revenue
is recognised if it is probable that there are future economic benefits that
will flow to the Group and can be reliably measured.
Interest income is recognised on a time proportion basis using the effective
interest method. The effective interest method is a method of calculating
the amortised cost of a financial asset or a financial liability and of
allocating the interest income or interest expense over the relevant period
of the asset or liability. The effective interest rate is the rate that
exactly discounts the estimated future cash payments or receipts through the
expected life of the financial instrument or, when appropriate, a shorter
period to the net carrying amount on initial recognition. When calculating
the effective interest rate, the Group estimates the cash flows considering
all contractual terms of the financial instrument, but does not consider
future credit losses. The calculation includes all fees and points paid or
received between parties to the contract that are an integral part of the
effective interest rate.
When a receivable is impaired, the group reduces the carrying amount to its
recoverable amount – being the estimated future cash flow discounted at
original effective interest rate of the instrument – and continues unwinding
the discount as interest income. Interest income on impaired loans is
recognised either as cash is collected or on a cost recovery basis as
conditions warrant.
The Group earns fee income from customers for: credit transactions, related
card fees, legal charges and loan servicing activities. Transaction and
services fees are recognised when the service are provided.
Dividend income is recognised when the right to receive payment is
established.
The initial amount of revenue agreed in the contract and any variations in
the contract to the extent that it is probable that they will result in
revenue and they are capable of being reliably measured.
Gains or losses on disposal of repossessed properties are reported in
(Loss)/Profit.
Properties in possession
Repossessed properties acquired in exchange for loans as part of an orderly
realisation are reported in property in possession under the property and
possession assets class, as they are held for sale in the ordinary course of
business. The repossessed properties are recognised when the risks and
rewards of the properties have been transferred to the group. The
corresponding loans are derecognised when the group becomes the owner of the
property. The property acquired is initially recorded at cost which is the
lower of its fair value (less costs to sell) and the carrying amount of the
loan (net of impairment) at the date of transferring ownership. It is
subsequently measured at the lower of the carrying amount and its net
realisable value. No depreciation is charged in respect of these properties.
Any subsequent write down of the acquired property to net realisable value
is recognised in profit or loss. Any subsequent increase in the net
realisable value, to the extent that it does not exceed the cumulative write
down, is also recognised in impairments. Gains or losses on disposal of
repossessed properties are reported in other operating income or operating
expenditure.
Financial Instruments - Impairment of financial assets
All financial assets except for those at fair value through profit and loss
are subject to review for impairment at least at each reporting date to
identify whether there is any objective evidence that the financial asset or
group of financial assets are impaired. The different criteria to determine
the impairment is for each asset class as follows:
Loans and receivables: Individual significant receivables are considered for
impairment when they are past due or when other objective evidence is
received that a specific counterparty will default. Receivables that are not
considered to be individually impaired are reviewed for impairment in
groups, which are determined by references explained in the impairment
policy.
Held till maturity investments: if there is objective evidence that the
investment is impaired, determined by reference to external credit ratings,
the financial asset is measured at the present value of estimated future
cash flow. Any changes to the carrying amount of the investment, including
impairment losses are recognized in profit and loss.
Available for sale financial assets: If the fair value cannot be estimated
reliably the impairment charges are recognized in profit or loss. All other
available for sale assets are measured at fair value, gains and losses from
movement in fair value is recognized in other comprehensive income and
reported as being available for sale reserve in equity.
Significant judgements and sources of estimation uncertainty
In preparing the financial statements, management is required to make
estimates and assumptions that affect the amounts represented in the
financial statements and related disclosures. Use of available information
and the application of judgement is inherent in the formation of estimates.
Actual results in the future could differ from these estimates which may be
substantially different to the financial statements. Significant judgements
include:
Impairment on trade and other receivables
The estimation of allowances for impairments is inherently uncertain and
depends on many factors. These factors include general economic conditions,
structural changes within industries, changes in individual customer
circumstances. There are also other external factors such as legal
requirements, regulatory specifications and governmental policies that if
changed can have a significant effect on the allowances.
Trade and other receivables are stated net of impairments. The impairments
are either made on an individual receivable or impairment on collective
receivables.
Trade and other receivables are considered impaired if, and only if, there
is objective evidence of impairment as a result of events that occurred
after initial asset recognition. The event would be the loss making event
and would adversely affect the recoverability and reliability of the
expected future cashflows. These events include, but are not limited to:
Breach of contract: default or delinquency in interest or principal
payments, instalment past due date is considered a breach of contract and
would affect the reliability to measure future cash flows;
Significant financial difficulty of borrower, directly communicated to
Afdawn or probable that borrower will enter bankruptcy or financial
re-organization. Data indicating that there is a quantifiable decrease in
the estimated future cash flow and recoverability of a grouping of assets,
although not yet indentified at individual asset level. These include
adverse change of payment status of groups, local and
national conditions relating to identifiable groups.
Indication of decrease in value of security held, especially indicators that
would adversely affect the value of properties held as security relating to
property bridging finance.
The group formally assesses its receivable portfolio for impairment on a
monthly basis based on formulated impairment formulae and judgement. The
extent to which the current carrying value exceeds the estimated recoverable
amount of advances is classified as impairment.
Impairments made on individual receivables: Substantial receivables,
especially relating to property bridging transactions are assessed on an
individual basis. The impairments were calculated, based on an approved
impairment policy. The impairments were made on judgements and formulated
calculations. The impairments were made by taking the following into
consideration for each receivable: credibility of borrower, security held,
value of security, repayment history, sureties signed and agreed settlement
terms.
Impairments made on collective receivables
Due to the vast number and ever changing status of especially short term,
unsecured receivables, the impairments are assessed on a collective grouping
of receivables. The impairments were calculated, based on an approved
impairment policy. The grouping of the receivables are made based on
specific criteria of each receivable, these include: borrower credibility,
ageing of last receipt, arrears amount, settlement agreement, status of
process to be followed to pursue future cashflows, age of borrower,
economical status, repayment instalments. The collective receivable balances
are impaired by a percentage that was specifically awarded to the
receivables within the collection. The percentage was based on extensive
market knowledge, historical default and recovery rates, repayment trends
and statistical techniques.
Impairment calculations contain both judgemental and non-judgemental inputs.
The extent of judgement utilised in new products is greater than that for
older products given the limited historical experience available for the new
products.
Receivables older than 90 days become collectable under the legal process of
recovery, these receivables fall within a new collection of receivables and
approved impairment percentage applied.
Impairment testing
The recoverable amounts of cash generating units and individual assets have
been determined based on the higher of value in use calculations and fair
values less costs to sell. These calculations require the use of estimates
and assumptions.
The group reviews and tests the carrying value of assets when events or
changes in circumstances suggest that the carrying amount may not be
recoverable. Assets are grouped at the lowest level for which identifiable
cash flows are largely independent of cash flows of other assets and
liabilities. If there are indications that impairment may have occurred,
estimates are prepared of expected future cash flows for each group of
assets.
3. Impairments of trade and other receivables
The majority of the impairment of trade receivables is based on default of
contractual repayment terms, underlying security value and assessed
recoverability at the time of reporting.
Impairment and provisions
28-Feb-14 28-Feb-13
R'000 R'000
Net movement in impairment 4,647 (51,704)
Note:
The movement in the impairment was accounted for as follows:
- A reversal through profit and loss of R1,5 mil (2013: R3,2 mil)
- A write off against gross debtors (already provided for) of R6,1 mil
(2013: R48,5 mil)
The total amount of write offs written off through profit and loss amounted
to R1,9 mil (2013: R1,8 mil).
As the personal loans segment has been classified as held for sale no
provisioning details are indicated
4. Discontinued operations
The board decided to sell the Elite Group Proprietary Limited subsidiary and
its subsidiary Elite Group Cell No. 00181 Proprietary Limited. The board was
busy negotiating with potential buyers at 28 February 2014 so the Assets and
Liabilities of the related companies have been re-classified as non-current
asset held for sale. Management have also discontinued operations in African
Dawn Debt Management Proprietary Limited and Nexus Personnel Finance
Proprietary Limited and a decision on has been taken to cease operation.
5. Property in possession
The company perfected its security over properties to enable value
realization in future period through sale. In the period the Almika 81
Property that had been classified as non-current asset held for sale was
transferred back to Property in Possession asset class as the sales
agreement fell through. The Green Oaks property remains in this class and is
being managed for rental income, until further development is possible.
28-Feb-14 28-Feb-13
R'000 R'000
Almika 81 Properties (Pty) Ltd – Benoni, Gauteng 7,029 -
Green Oaks – Centurion Gauteng 28,241 28,248
Impairment adjustment (10,522) (6,913)
Total 24,748 21,335
6. Segmental information
Figures in ZAR thousands
28 Feb 2014 Bridging Personal & Other Total
finance Short term Head office
Revenue, other income and interest 609 - 5,470 6,079
Continued operations profit/(loss)
for year 4,378 - (21,504) (15,771)
Discontinued operations profit/(loss)
for year (1,966) (730) (18) (2,714)
Net asset value (32,349) (3,822) 79,582 43,411
28 Feb 2013 Bridging Personal & Other & Total
Finance Short Term Head office
Revenue, other income and interest 2,321 - 7,367 9,688
Continued operations profit/(loss)
for year (9,424) - 5,153 (4,271)
Discontinued operations profit/(loss)
for year (2,118) 3,983 297 2,162
Net asset value (34,378) (3,100) 100,729 63,251
Other Notes
1. Corporate governance
The Directors and senior management of the Group endorse the Code of
Corporate Practices and Conduct as set out in the King III report on
Corporate Governance. Having regard for the size of the Group, the Board is
of the opinion that the Group complies with the Code as well as with the
Listings Requirements of the JSE Limited in all material respects. The Group
performs regular reviews of its corporate governance policies and practices
and strives for continuous improvement in this regard.
2. Human resources
Ongoing skills and equity activities continue to ensure compliance with
current legislation. Plans continue in terms of initiatives embarked upon
that contribute to broader skills development and sourcing appropriately
qualified staff on an ongoing basis.
3. Dividend
The Company will not pay a dividend for the 2014 financial year.
4. Post balance sheet events
On 29 May 2014 the company has entered into an agreement to dispose of the
Elite Group of companies. The agreement is subject to the fulfilment of
certain suspensive conditions.
Comments from the board:
Strategic Intent
African Dawn Capital Limited (the "Company") is an active investment holding
company acquiring shareholdings in entrepreneurial companies, with strong
innovation drive, which are in proven growth phases by enhancing the
capabilities of these entities to accelerate long term sustainable growth.
The group through its wholly owned subsidiary Elite Group Proprietary
Limited ("Elite") provides unsecured personal loans (micro finance).
Effective March 2014, the Company acquired 100% of the issued share capital
of Knife Capital Proprietary Limited in order to have the intellectual
capital, capacity and capabilities to help execute in its vision to become
an active investment holding company.
Authorised and issued share capital
The authorised ordinary share capital amounts to 5 000 000 000. The issued
share capital on 28 February 2014 amounted to 508 184 155. As a result of
the rights issue, 272 086 442 new shares were issued on 4 April 2014 at 8c
per share, including shares paid in terms of the rights offer underwriting
agreement as detailed in the circular dated 7 March 2014. The cash generated
from the rights issue and guaranteed underwriting allocations amounted to
R21,8 million. As a result of the acquisition of Knife Capital (Pty) Ltd, a
further 100 000 000 shares were issued at 10c per share on 8 April 2014 in
exchange for shares in Knife Capital Proprietary Limited. The number of
shares in issue following the conclusion of the rights issue and the Knife
Capital acquisition and as at the date of this Directors' Report is 880 270
597.
Allegro Holdings (Pty) Limited
As stated in the 2010, 2011 ,2012 and 2013 annual reports of the Group,
Allegro Holdings Proprietary Limited ("Allegro"), a former subsidiary of the
Company, was placed in curatorship in 2009 at which time Allegro owed the
Company R 3.8 million. To date the Company has not received any claims from
third parties in relation to Allegro and as the Company does not believe
that there are any grounds for such claims, no provisions have been made for
any such contingency.
Board of Directors
The directors in office at the date of this report are as follows:
Directors Office Designation Changes
JS Van der Merwe Chairman Non-Executive* Appointed 10 April 2013
WJ Groenewald Chief Executive
Officer ("CEO") Executive **
EA Van Heerden Finance Director Executive Appointed 27 March 2014
JK Van Zyl Executive *** Appointed 28 May 2013
V Lessing Non-executive
Independent Appointed 28 May 2013
HH Hickey Chair audit Non-executive
committee Independent
TF Kruger Finance Director Executive Resigned 01 February 2014
WN Luhabe Non-executive
Independent Appointed 29 May 2013,
Resigned 30 September
2013
GE Stoop Non-executive
Independent Resigned 05 November 2013
L Taylor Non-executive
Independent Resigned 29 May 2013
CF Wiese Non-executive
Independent Resigned 10 June 2013
A Bohmert Executive Appointed 22 April 2014
SM Roper Non-executive
Independent Appointed 22 April 2014
On 10 April 2013, TF Kruger stepped down as Chief Executive Officer and was
appointed as Financial Director on this date and continued in the role until
his resignation on 1 February 2014.
On 10 April 2013, JS van der Merwe was appointed as executive Chairman and
continued in this role until 24 February 2014 when he became non-executive
chairman.
WJ Groenewald was appointed acting Chief Executive Officer on 24 February
2014 and became permanent Chief Executive Officer on 28 March 2014
subsequent to the Knife Capital Proprietary Limited acquisition becoming
effective.
Subsequent to the Knife Capital Proprietary Limited transaction EA Van
Heerden was appointed Financial Director, JK Van Zyl became executive
director and Andrea Bohmert was appointed as executive director and SM Roper
was appointed as non-executive independent director.
South African Revenue Services ("SARS") liability
We have submitted documentation as set out in terms of Section 200 of the
Income Tax Act, which will enable tax matters to be settled with SARS. The
SARS liability has been fully provided for in the accounts.
Appreciation
The board extends its appreciation to our management and staff for their
efforts during this reporting period. We also thank our customers and
suppliers for their continued support. To our shareholders, our gratitude in
believing and supporting the rights offer and turnaround story.
African Dawn Capital Limited
("African Dawn" or "the Company" or "the Group")
Registration number: 1998/020520/06
(Incorporated in the Republic of South Africa)
JSE share code: ADW ISIN code: ZAE000060703
Registered office: 1st Floor, Quadrum 4, Quadrum Office Park, 50 Constantia
Boulevard, Constantia Kloof Ext 28, 1709
Tel: +27 (11) 475 7465 Fax: +27 (11) 325 2716
Directors: WJ Groenewald (Chief Executive Officer), V Lessing (independent
non-executive), JS Van der Merwe (non-executive Chairman), HH Hickey
(independent non-executive), JK Van Zyl (executive), A Bohmert (executive)
SM Roper (independent non-executive)
Company secretary: W Somerville (on behalf of Corporate Statutory Service
Proprietary Limited)
Auditors: Grant Thornton
Designated Advisor: Sasfin Capital, a division of Sasfin Bank Limited
Transfer secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
Date:
30 May 2014
Sponsor: Sasin Capital a division of Sasfin Bank limited
Date: 30/05/2014 05:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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