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AFRICAN DAWN CAPITAL LIMITED - Interim results for six month period ended 31 August 2013

Release Date: 29/11/2013 14:00
Code(s): ADW     PDF:  
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Interim results for six month period ended 31 August 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")







CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION FOR THE SIX MONTHS

ENDED 31 AUGUST 2013

                                   Six months     Six months           Year

                                        ended          ended          ended

                                    31-Aug-13      31-Aug-12      28-Feb-13

                                        R`000          R`000          R`000

                                   (Unaudited)     (Reviewed)      (Audited)

                                                   (Restated)     (Restated)



Non-current assets                       4,193         2,327          3,329

Property, plant and equipment            1,145           979            899

Intangible assets                        2,410           729          1,792

Other financial assets                     638           619            638



Current assets                          111,946      120,160        114,084

Property in possession                   21,327       25,560         21,335

Other financial assets                      300          300            300

Current tax receivable                       95        1,639             95

Trade and other receivables             207,078      247,256        208,815

Impairment on trade receivables        (125,462)    (174,362)      (125,475)

Net trade and other receivables          81,616       72,894         83,340

Cash and cash equivalents                 8,608       19,767          9,014



Non-current assets held for sale         3,840                -       4,129



Total assets                           119,979       122,487        121,542



Capital and reserves                     59,172       65,609         63,251

Share capital                           284,634      284,634        284,634

Accumulated (loss)                     (225,462)    (219,025)      (221,383)



Non-current liabilities                 25,635        24,862         22,682

Borrowings                              25,338        24,443         22,366

Finance lease obligation                   297           419            316



Current liabilities                     35,172        32,016         35,609

Finance lease obligation                    83           111             77

Operating lease obligation                 195             -            195

Borrowings                               8,872         4,544          7,292

Current tax payable                     18,468        18,148         18,709

Trade and other payables                 7,554         9,213          9,336



Total liabilities                       60,807        56,878         58,291



Total equity and liabilities           119,979       122,487        121,542



Ordinary shares in issue (`000)        508,184      508,184         508,184

Treasury shares (’000)                   3,268        3,268           3,268

Net number of ordinary shares (’000)   504,916      504,916         504,916

Net asset value per share (cents)        11.7          12.9            12.5

Net tangible asset value per share       11.2          12.8            12.2



Condensed Consolidated Statements of Comprehensive Income for the six months

ended 31 August 2013

                                   Six months     Six months           Year

                                        ended          ended          ended

                                    31-Aug-13      31-Aug-12      28-Feb-13

                                        R`000          R`000          R`000

                                   (Unaudited)     (Reviewed)      (Audited)

                                                   (Restated)     (Restated)



Revenue                                18,795         16,342         33,105

Cost of sales                            (590)          (464)          (399)

Gross profit                           18,205         15,878         32,706

Other income                            1,275          1,557          2,770

Operating and other expenses          (20,257)       (14,838)       (32,455)

Operating (loss)/profit                  (777)         2,597          3,021

Investment revenue                         80            348            620

Finance cost                           (2,230)          (990)        (2,286)

(Loss)/Profit before taxation          (2,927)         1,955          1,355

Taxation                                 (268)           (55)          (627)

(Loss)/Profit for the period from

continuing operations                  (3,195)         1,900            728



(Loss)/Profit for the period from

Discontinued operations                  (884)        (1,652)        (2,838)



(Loss)/Profit for the period           (4,079)           248         (2,110)





Weighted number of shares              508,184       508,184        508,184

Treasury shares                          3,268         3,268          3,268

Net weighted number of shares          504,916       504,916        504,916

Total Basic (loss)/earnings per share   (0.81)          0.05          (0.42)

Basic (loss)/earnings continued

operations per share                    (0.63)          0.38           0.14

Basic (loss)/earnings discontinued

operations per share                    (0.18)         (0.33)         (0.56)

Total Diluted (loss)/earnings per share (0.56)          0.10          (0.24)

Diluted (loss)/earnings continued

operations per share                    (0.41)          0.43           0.32

Diluted (loss)/earnings discontinued

operations per share                    (0.15)         (0.33)         (0.56)

Total Headline (loss)/earnings per share(0.75)          0.05          (0.40)

Headline (loss)/earnings continued

operations per share                    (0.57)          0.10          (0.24)

Headline (loss)/earnings discontinued

operations per share                    (0.18)         (0.05)         (0.16)

Total Diluted headline (loss)/earnings

per Share                               (0.52)          0.11          (0.26)

Diluted headline (loss)/earnings

continued operations per share          (0.37)          0.10          (0.24)

Diluted headline (loss)/earnings

discontinued operations per share       (0.15)          0.01          (0.02)



Reconciliation of headline earnings

Basic (loss)/earnings                  (4,079)            248           (2,110)

Non-recurring adjustments

Profit/(Loss) on disposal of property

Plant and equipment                        -               16              (24)

Impairment of property, plant & equipment 289               -              110

Headline (loss)/earnings               (3,790)            264           (2,024)



Condensed Consolidated Statements of Comprehensive Income for the six months

ended 31 August 2013



                                     Six months    Six months       Year ended

                                          ended         ended

                                      31-Aug-13     31-Aug-12        28-Feb-13

                                          R`000         R`000            R`000

                                     (Unaudited)    (Reviewed)        (Audited)

                                                    (Restated)       (Restated)



(Loss)/Profit for the period            (4,079)            248          (2,110)



Other comprehensive income:                   -                 -            -



Total comprehensive income              (4,079)            248          (2,110)

Attributable to

Profit from continuing operations       (3,195)          1,900             728

Profit from discontinued operation        (884)         (1,652)         (2,838)

Owners of the parent                    (4,079)            248          (2,110)



Condensed Consolidated Statements of Changes in Equity for the six months

ended 31 August 2013

                                 Share   Share Reserves+    Accum Ordinary

                               Capital Premium Other NDR     Loss     Share-

                                                                    holders

                                                                     Equity

Balance at 29 Feb 2012           5,074 279,560        97 (219,370) 65,361

Total comprehensive income

for the six months                   -       -         -       248      248

Transfer to insurance reserves       -       -       (97)       97        -

Balance at 31 Aug 2012           5,074 279,560         - (219,025) 65,609

Total comprehensive income

for the six months                   -       -         -    (2,358) (2,358)

Balances at 28 Feb 2013          5,074 279,560         - (221,383) 63,251

Total comprehensive loss

for the six months                   -       -         -    (4,079) (4,079)

Balance at 31 Aug 2013           5,074 279,560         - (225,462) 59,172



Consolidated Statements of Cash Flows for the six months

ended 31 August 2013

                                   Six months     Six months              Year

                                        ended          ended             ended

                                    31-Aug-13      31-Aug-12         28-Feb-13

                                        R`000          R`000             R`000

                                    (Unaudited)    (Reviewed)        (Audited)

                                                   (Restated)        (Restated)

Cash inflow/(outflow) from continuing

operating activities                    (2,245)        5,763           (3,137)

Cash (outflow) from discontinuing

operating activities                      (614)       (1,480)           (2,883)

Cash (outflow) from

investing activities                      (895)        (826)        (2,443)

Cash inflow/(outflow) from

Financing activities                     3,348           859         2,026

Net cash (outflow)/inflow for period      (406)        4,316        (6,437)

Cash and cash equivalents at

beginning of period                      9,014        15,451         15,451

Cash and cash equivalents at

end of period                            8,608        19,767          9,014



Basis of preparation



The condensed interim financial statements are prepared in South African

Rands thousands (‘000) on the historical-cost basis, except for certain

assets and liabilities which are carried at amortised cost, and derivative

financial instruments which are stated at their fair value. The financial

statements have been prepared in accordance with the framework concepts and

measurement and recognition requirements of International Financial

Reporting Standards (IFRS), IAS 34 as well as the SAICA Financial Reporting

Guides as issued by the Accounting Practices Committee and Financial

Pronouncements as issued by Financial Reporting Standards Council, the

requirements of the South African Companies Act (Act No 71 of 2008), as

amended, and the JSE Listings Requirements. The group has adopted the

following new standards: Amendment to IFRS 7 – Disclosures – Offsetting

Financial Assets and Financial Liabilities, IFRS 10 – Consolidated

Financial Statements, IFRS 11 – Joint Arrangements, IFRS 12 – Disclosure of

Interests in Other Entities, IFRS 13 – Fair Value Measurement, Amendments

to IAS 1 – Presentation of Items of Other Comprehensive Income, Amendments

to IAS 16- Property, Plant and Equipment, Amendment to IAS 19- Employee

benefits, Revised IAS 27 and 28 – Investments in Associates and Joint

Ventures, Amendments to IAS 32- Financial Instrument Presentation,

Amendments to IAS 34- Interim Financial Reporting. There was no material

impact on the interim financial statements identified based on management’s

assessment of these standards.



In accordance with IFRS 5 (Non-current Assets Held for Sale and

Discontinued Operations) the comparative figures have as indicated been

restated to account for the discontinued operations.





The condensed interim financial information for the six-month period ended

31 August 2013 were not reviewed or audited by the Group`s auditors, Grant

Thornton.

The condensed consolidated interim financial statements were prepared by E

Nel CA(SA) and supervised by the financial director, T Kruger CA(SA).



Notes to the condensed consolidated financial statements



1.   Reporting entity:



African Dawn Capital Limited is a Company domiciled in the Republic of South

Africa. The condensed consolidated financial statements of the Company for

the six months ended 31 August 2013 comprise the Company and its

subsidiaries and the Group`s interests in associates and jointly controlled

entities.



2. Statement of compliance:

The consolidated interim financial information for the six months ended 31

August 2013, has been prepared in accordance with International Financial

Reporting Standards (IFRS), the interpretations adopted by the International

Accounting Standards Board (IASB) and the requirements of the South African

Companies Act. These condensed interim financial statements are presented in

compliance with IAS 34 - Interim Financial Reporting as well as SAICA

Financial Reporting Guides as issued by the Accounting Practices Committee

and Financial Pronouncements as issued by the Financial Reporting Standards

Council, and should be read in conjunction with the annual financial

statements for the year ended 28 February 2013. The results were approved by

the Board on 26 November 2013.



3. Significant accounting policies:



The accounting policies adopted in the preparation of the condensed interim

financial information are consistent with those of the annual financial

statements for the year ended 28 February 2013, other than those mentioned

in basis of preparation above. For a full list of standards and

interpretations which have been adopted we refer you to the 28 February 2013

annual financial statements.



4. Accounting Estimates:



The preparation of financial statements requires management to make

judgements, estimates and assumptions that affect the application of

accounting policies and the reported amounts of assets and liabilities,

income and expense. Actual results may differ from these estimates. Except

as described below, in preparing these condensed consolidated financial

statements, the significant judgements made by management in applying the

Group`s accounting policies and the key sources of estimation certainty were

the same as those that applied to the consolidated financial statements for

the six months ended 31 August 2012 and year ended 28 February 2013. During

the six months ended 31 August 2013 management reassessed its estimates in

respect of the recoverable amount of investments in subsidiaries, the

recoverable amount of trade and other receivables (in conjunction with the

current economic climate) and deferred tax assets.



5. Impairments of trade and other receivables



The majority of the impairment of trade receivables is based on the

underlying security value at the time of reporting. The security values were

reassessed at 31 August 2013 and provisions were adjusted accordingly.



Impairment

                                      31-Aug-13    31-Aug-12      28-Feb-13

                                          R`000        R`000          R`000

Movement in impairment provision           (13)       (2,817)       (23,486)



6. Property in possession



The Company perfected its security over properties in order to protect its

capital advances in terms of its loans, by taking transfer of ownership. The

properties will be developed, where it is considered economically viable,

and sold when favourable market conditions exist in order to realise the

carrying value thereof.



7. Segmental information

Figures in ZAR thousands



31 Aug 2013                          Bridging     Personal &         Other      Total

                                      Finance     Short Term



Revenue from continued operations      321          16,037           2,437      18,795

Revenue from discontinued operations   571              -                -         571

Net (loss)from continued

operations                            (313)          (122)           (2,760)    (3,195)

Net (loss) from discontinued

operations                            (884)             -                -        (884)

Net asset value                    (35,575)         (1,642)          96,389      59,172



31 Aug 2012                          Bridging     Personal &         Other      Total

                                      Finance     Short Term



Revenue                                 1,291       12,738             2,313     16,342

Net profit/(loss)from continued

operations                            (8,690)        2,217             8,372    (1,899)

Net (loss) from discontinued

operations                             (1,652)           -                 -    (1,652)

Net asset value                       (33,178)     (3,687)           102,474     65,609





8. Discontinued operation

Management took the decision to close down a subsidiary African Dawn Debt

Management (Pty) Ltd. This was decided to curtail costs as this unit was

unable to secure viable mandates to generate income.



Afdawn Debt Management Proprietary Limited



                                    Six months       Six months                   Year

                                         ended            ended                  ended

                                     31-Aug-13        31-Aug-12              28-Feb-13

                                         R`000            R`000                  R`000

                                    (Unaudited)       (Reviewed)              (Audited)



Statement of comprehensive income



Revenue                                    571                -                    428

Employee costs                          (1,209)          (1,443)                (2,847)

Other expenses                            (246)            (209)                  (419)



Loss for the Period                       (884)          (1,652)                (2,838)



Statement of financial position



Non-Current Assets                                               -



Current Assets                           1,087                 107               1,000

Trade and other receivables                469                  19                 487

Intercompany loan receivable               502                   -                 513

Cash and cash equivalents                  116                  88                   -



Total Assets                             1,087                 107               1,000



Non Current liabilities

Current liabilities                    13,864         11,446         12,894

Intercompany loan payable              13,803         11,396         12,715

Trade and other payables                   61             50            179



Total Liabilities                      13,864         11,446         12,894



COMMENTS FROM THE BOARD



The past period concentrated effort on transforming and preparing the

company to enable it to execute on the announced change in strategy to

become an active investment holding company, without the legacy of the past

history. The company will focus on 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 execution of the said strategy will require the support of our major

stakeholders together with various regulatory approvals. In meeting with

various large shareholders, it was evident that the change in vision and

related corporate actions that underpinned the new vision would be formally

supported. The board of directors of Afdawn will diligently drive certain

short-term actions to propel the strategy forward:

1. Further capabilities will be acquired and institutionalised, which will

include deal sourcing and structuring capabilities, investee mentorship

programmes, the setting up of an investment fund and co-investment

alliances. To this end we draw shareholders attention to the cautionary

announcement dated 18 November 2013.

2. The disposal of non-core legacy assets and conversion thereof into cash

is of paramount importance;

3. The company will disinvest from its exposure to the unsecured lending as

per it's new business model and will actively pursue appropriate buyers for

Elite Group. This decision was made by the board subsequent to 31 August

2013;

4. New permanent capital is a prerequisite in fulfilling our new vision.

Exciting new alliances will drive the investment pipeline. Shareholders will

have the opportunity to participate in the new strategy through a proposed

rights offer; and

5. Afdawn will be rebranded to articulate the vision and strategy in a

visual manner.



During the period the property transfer collection business (“Debt

Management”) was discontinued and outsourced to a third party which includes

management of the discontinued business on a success fee basis. This

initiative will see an estimated net cost savings of R1,7m per annum. The

present cost curtailing programmes will be extended with the company

establishing a very small head office structure.



It is imperative that we unlock shareholder wealth for all stakeholders

through the successful execution of the new vision. We are excited in the

strides we have made thus far.



Changes to the board of directors



The composition of the board has changed significantly since the last year

end as the company embarked on sourcing the appropriate capabilities at

board level to execute the new vision. On 10 April 2013 TF Kruger stepped

down as Chief Executive Officer and was appointed as Financial Director and

on the same date, Mr JS van der Merwe was appointed as executive chairman.

Further changes occurred to the board with the appointments of Ms WN Luhabe,

V Lessing, and JK van Zyl on 29 May 2013. The Board accepted the

resignations of L Taylor (29 May 2013), and CF Wiese (10 June 2013).

Subsequent to the reporting period Ms WN Luhabe (30 September 2013) and Dr

GE Stoop (5 November 2013) resigned.



South African Revenue Services (“SARS”) liability



Afdawn continued to work closely with SARS on all aspects relating to our

tax position in terms of the agreed action plan with SARS. Documentation as

set out in Section 200 of the Income Tax Act, which enables corporate

companies to settle their tax obligations with SARS, has been submitted and

queries raised by SARS answered. We have vigorously explored and consulted

with various independent tax experts to ensure that a beneficial outcome for

Afdawn could be achieved. 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 concluded a Memorandum of Understanding (28 February 2013) which

will facilitate an amicable conclusion to the matter. Progress has been slow

in this regard. Thus far the company has not become aware of any information

during our deliberations that will alter our conclusion reached previously.

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.



National Housing Financing Corporation (“NHFC”)



In terms of the settlement agreement with the NHFC that was signed on 30 May

2011, Nexus Personnel Finance’s (“Nexus”) (a wholly owned subsidiary of

Afdawn) facility of R5 million became payable in October 2013 subsequent to

reporting date of 31 August 2013. Nexus is currently negotiating extending

the terms with the NHFC.



Prospects



The company has embarked on its journey to execute its new vision with

passion and anticipation that this will create appeal to the investing

community. We remain cognisant of the remaining challenges and believe that

prudently constructed plans will prove sustainable.



Administration

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) 475 7413

Directors: JS van der Merwe (executive chairman)(appointed 10 April 2013),

TF Kruger (previous chief executive officer, appointed financial director on

10 April 2013), HH

Hickey (independent non-executive), WJ Groenewald (non-executive), Vanya

Lessing (lead independent non-executive), Keet van Zyl (independent non-

executive)

Company secretary: W Somerville (on behalf of Corporate Statutory Service

Proprietary Limited)

Auditors: Grant Thornton



Transfer secretaries: Computershare Investor Services Proprietary Limited

70 Marshall Street, Johannesburg, 2001



29 November 2013

Johannesburg



Designated Advisor:

Sasfin Capital, a division of Sasfin Bank Limited


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