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Audited Condensed Consolidated Statements of Financial Position for the year ended 28 February 2013
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"
Audited Condensed Consolidated Statements of Financial Position for the year
ended 28 February 2013
Year ended Year ended
28-Feb-13 29-Feb-12
R`000 R`000
(Audited) (Audited)
Non-current assets 3,329 1,439
Property, plant and equipment 899 770
Intangible assets 1,792 -
Other financial assets 638 669
Current assets 114,084 120,849
Property in possession 21,335 25,662
Other financial assets 300 300
Current tax receivable 95 9,713
Trade and other receivables 208,815 246,902
Impairment on trade receivables (125,475) (177,179)
Net trade and other receivables 83,340 69,723
Cash and cash equivalents 9,014 15,451
Non-current assets held for sale 4,129 -
Total assets 121,542 122,288
Capital and reserves 63,251 65,361
Share capital 284,634 284,634
Reserves - 97
Accumulated (loss) (221,383) (219,370)
Non-current liabilities 22,682 21,608
Borrowings 22,366 21,590
Finance lease obligation 316 18
Current liabilities 35,609 35,319
Finance lease obligation 77 35
Operating lease obligation 195 -
Borrowings 7,292 5,484
Current tax payable 18,709 20,064
Trade and other payables 9,336 9,736
Total liabilities 58,291 56,927
Total equity and liabilities 121,542 122,288
Net asset value per share (cents) 12.5 12.9
Net tangible asset value per share (cents) 12.2 12.9
Audited Condensed Consolidated Income Statement for the year ended 28
February 2013
Year ended Year ended
28-Feb-13 29-Feb-12
R`000 R`000
(Audited) (Audited)
Revenue 33,533 31,472
Cost of sales (399) (407)
Gross profit 33,134 31,065
Other income 2,770 22,622
Operating and other expenses (35,721) (39,962)
Operating profit 183 13,725
Investment revenue 620 309
Finance cost (2,286) (3,151)
(Loss)/Profit before taxation (1,483) 10,883
Taxation (627) (478)
(Loss)/Profit from continuing operations (2,110) 10,405
(Loss)/Profit from discontinued operations - 358
(Loss)/Profit for the year (2,110) 10,763
Weighted number of shares 508,184 332,838
Number of issued shares 508,184 508,184
Basic (loss)/earnings per share from continuing and
discontinued operations (0.42) 3.23
Diluted (loss)/earnings per share from continuing
operations (0.24) 2.79
Headline (loss)/earnings per share from continuing and
discontinued operations (0.40) 3.06
Diluted headline (loss)/earnings per share from
continuing and discontinued operations (0.26) 2.72
Reconciliation of headline earnings
Basic (loss)/earnings (2,110) 10,763
Non-recurring adjustments
Profit on sale of subsidiary - (1,021)
Impairment of property, plant and equipment 110 249
Loss/(Profit) on disposal of property, plant
equipment (24) 2
Loss on disposal of non current asset
held for sale - 188
Headline (loss)/earnings (2,024) 10,181
Audited Condensed Consolidated Statements of Comprehensive Income for the
year ended 28 February 2013
Year ended Year ended
28-Feb-13 29-Feb-12
R`000 R`000
(Audited) (Audited)
(Loss)/Profit for the year (2,110) 10,763
Other comprehensive income: - -
Total comprehensive income/(loss) (2,110) 10,763
Attributable to
(Loss)/Profit from continuing operations (2,110) 10,405
(Loss)/Profit from discontinued operation - 358
Owners of the parent (2,110) 10,763
Audited Condensed Consolidated Statements of Changes in Equity for the year
ended 28 February 2013
Share Share Total Accumulated Ordinary
Capital Premium Reserves Loss Share
Holders
Equity
Balance at 28 Feb 2011 2,221 253,886 105 (230,133) 26,079
Issue of ordinary share
During Rights Issue 2,853 25,674 - - 28,527
Total comprehensive income
for the 2012 year - - - 10,763 10,763
Transfer from insurance reserve - - (8) - (8)
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 from insurance reserve - - (97) 97 -
Balance at 28 Feb 2013 5,074 279,560 - (221,383) 63,251
Audited Condensed Consolidated Statements of Cash Flows for the year ended
28 February 2013
Year ended Year ended
28-Feb-13 29-Feb-12
R`000 R`000
(Audited) (Audited)
Cash flow from operating activities (6,020) 9,448
Cash flow from investing activities (2,443) 2,694
Cash flow from financing activities 2,026 (4,569)
Net cash flow for the year (6,437) 7,573
Cash and cash equivalents at
beginning of the year 15,451 7,878
Cash and cash equivalents at
end of the year 9,014 15,451
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
2013 was supervised by the acting Financial Director of the group (appointed
full time 10 April 2013), Mr. T.F Kruger.
Audit opinion
These results have been audited by the group’s independent auditors, Grant
Thornton. Their unmodified audit report 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 Audited 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 2013 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 29 February 2012.
Policies that became effective in 2013 and adopted include:
Disclosures – Transfers of Financial Assets (Amendments to IFRS 7);
IFRIC 19 Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12);
Circular 3/2012 – Headline Earnings.
Below is an extract of the most significant accounting policies of the
group.
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 fraud
at agent levels, 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. The individual receivable values are assessed to be at least the
security value that can be realized within 3 months in an active market.
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 developed with help of
specialized external asset valuators and 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-13 29-Feb-12
R`000 R`000
Net movement in impairment (51,704) (23,485)
Note:
The movement in the impairment was accounted for as follows:
A reversal through profit and loss of R 3,2 mil (2012: R 9,2 mil)
A write off against gross debtors (already provided for) of R 48,5 mil
(2012: R 14,3 mil)
The total amount of write offs written off through profit and loss accounted
to R 1,8 mil (2012: R 9,5 mil).
The movement in the impairments relates to the following:
Individual impairments 145 6,161
Collective impairments 495 4,874
Individual impairments reversed (1,196) (14,363)
Collective impairments reversed (1,421) (12,178)
Amounts provided for and written off as uncollectable(49,727) (1,900)
Discontinued operations - (6,080)
4. Property in possession
The company perfected its security over properties to enable value
realization in future period through sale. In the period two properties met
the criteria of Non Current asset held for sale: Volksrust (R709 000) and
Almika (R 3 420 000) and were moved out of the Property in Possession asset
class. The Green Oaks property remains in this class and is being managed
for rental income, until further development is possible.
28-Feb-13 29-Feb-12
R`000 R`000
Almika Properties (Pty) Ltd – Brakpan, Gauteng - 7,029
Green Oaks – Centurion Gauteng 28,248 28,446
Erven 1593 to 1599, Volksrust, Mpumalanga - 709
Impairment adjustment (6,913) (10,522)
Total 21,335 25,662
5. Segmental information
Figures in ZAR thousands
28 Feb 2013 Bridging Personal & Other Total
finance Short term Head office
Revenue, other income and interest 2,321 27,235 7,367 36,923
Segmental (Loss)/Profit for the year (11,542) 3,982 5,450 (2,110)
Net asset value (34,378) (3,100) 100,729 63,251
29 Feb 2012 Bridging Personal & Other Total
finance Short term Head office
Revenue, other income and interest 1,861 34,225 18,317 54,403
Segmental (Loss)/Profit for the year 5,311 9,165 (3,713) 10,763
Net asset value (22,837) (7,082) 95,280 65,361
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 2013 financial year.
Comments from the board
Prospects
The board has decided to change the vision of the company to that of an
active investment holding company, acquiring shareholding in entrepreneurial
companies, with a strong innovation drive and which are in proven growth
phases, by enhancing the capabilities of these entities to accelerate long
term sustainable growth. To ensure the execution of the changed vision, it
is of utmost importance to ensure that the company has the appropriate
capabilities and experience, hence we have appointed Mr JS van der Merwe,
refer to change in board note below.
The period under review remained challenging, but the unsecured lending
business has been able to grow its revenue by 6,4 % year on year and the
gross debtors book increased by 43%, the net profit R 3,18 mil (2012: R 1,47
mil). Elite has not relaxed its credit criteria in assessing affordability
and would rather retain a healthy credit quality in our book, than chasing
loan growth that may ultimately result in higher bad debt in time to come.
Changes to the board of directors
The composition of the board changed since the last year end. Dr GE Stoop
was appointed within the 2013 financial year on 23 May 2012 as an executive
director. Subsequent to year end on 10 April 2013 TF Kruger stepped down as
Chief Executive Officer and was appointed as Financial Director. On 10 April
2013, Mr JS van der Merwe was appointed as executive chairman and CF Wiese
assumed the role of lead independent non executive.
South African Revenue Services (“SARS”) liability
Afdawn has worked closely with SARS on all aspects relating to a tax
position in terms of the agreed action plan with SARS and only a few returns
remain outstanding for final assessments by SARS. We are in the process of
submitting our documentation as set out in Section 200 of the Income Tax
Act, which will enable the tax matters to be finally settled. The SARS
liability has been fully provided for in our accounts with regards to
returns that have been assessed, disagreements were provided for to the
extent of the most likely outcome.
Allegro Holdings Proprietary Limited ("Allegro")
Afdawn has engaged with the Curators of Allegro to explore the possibility
that the matter can be settled in some form as the uncertainty impedes
Afdawn in sourcing alternative funding outside our regular funders. The
company has concluded a Memorandum of Understanding (28 February 2013) that
sets out the rules of engagement that will enable us to determine the facts
which in turn will facilitate a conclusion to the matter. Thus far the
company has not become aware of any information during our deliberations
that will alter our conclusion reached previously.
As mentioned in the 2010, 2011 and 2012 Annual Reports, a former subsidiary
company Allegro was placed in curatorship in 2009 and was therefore
deconsolidated. At that time Allegro was indebted to Afdawn in the amount of
R 3.8 million. A Curator has repeatedly made verbal statements regarding a
possible claim that he claims to have against Afdawn and/or its
subsidiaries. This has been ongoing since early 2010 and, notwithstanding
written requests to the Curators, no formal claim has been forthcoming, nor
have we been advised of the basis of any claim. The latest CMM curators'
reports to the Financial Services Board ("FSB") in November 2011, March 2012
and September 2012, contained no indication of a formal claim against
Afdawn.
On 17 April 2012 the Curators lodged a formal claim against Absa and
directors within the Allegro group at the time at which the alleged claim
arose. To the date of signing this report no claims have been received by
Afdawn, nor have we been able to establish any basis for a potential claim
against Afdawn and therefore no provisions have been made for any such
contingency.
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.
African Dawn Capital Limited
("Afdawn" 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: JS van der Merwe (executive chairman)(appointed 10 April 2013),
TF Kruger (previous chief executive officer, appointed financial director on
10 April 2013),Dr GE Stoop (executive)(appointed 23 May 2012), L Taylor
(independent non-executive), CF Wiese (lead independent non-executive), HH
Hickey (independent non-executive), WJ Groenewald (non-executive)
Company secretary: W Somerville (on behalf of Corporate Statutory Services
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: 27 May 2013
Johannesburg
Designated Advisor
Sasfin Capital
A division of Sasfin Bank Limited
Date: 27/05/2013 10:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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