Wrap Text
Reviewed Condensed Consolidated Statements for the six months ended 31 August 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 for the six months ended 31 August 2014
Condensed Consolidated Statements of Financial Position for the six months ended 31 August 2014
Six months Six months
ended ended Year ended
31-Aug-14 31-Aug-13 28-Feb-14
R'000 R'000 R'000
(Reviewed) (Unaudited) (Audited)
(Restated)
Non-current assets 10,307 102 92
Property, plant and equipment 282 102 92
Intangible assets 5,995 - -
Goodwill 4,030 - -
Current assets 61,987 55,435 45,424
Property in possession 24,748 21,327 24,748
Other financial assets - - -
Current tax receivable 131 95 95
Trade and other receivables 150,101 153,610 149,619
Impairment on trade receivables (130,201) (122,174) (130,122)
Net trade and other receivables 19,900 31,436 19,497
Cash and cash equivalents 17,208 2,577 1,084
Non-current assets held for sale 51,475 64,442 59,766
Total assets 123,769 119,979 105,282
Capital and reserves 61,879 59,172 43,411
Share capital 313,633 284,634 284,634
Accumulated loss (251,754) (225,462) (241,223)
Non-current liabilities 8,985 9,474 8,844
Borrowings 8,985 9,474 8,844
Current liabilities 32,741 29,928 32,492
Bank overdraft - - 1
Operating lease obligation 9 - 174
Borrowings 8,616 7,756 7,893
Current tax payable 18,563 18,188 18,226
Trade and other payables 5,553 3,984 6,198
Liabilities of disposal groups 20,164 21,405 20,535
Total liabilities 61,890 60,807 61,871
Total equity and liabilities 123,769 119,979 105,282
Ordinary shares in issue (`000) 880,271 508,184 508,184
Treasury shares held ('000) 3,268 3,268 3,268
Net number of ordinary shares ('000) 877,003 504,916 504,916
Net asset value per share (cents) 7.0 11.7 8.5
Net tangible asset value per share (cents) 5.9 11.2 8.5
Condensed Consolidated Statements of Comprehensive Income for the six months ended 31 August 2014
Six months Six months
ended ended Year ended
31-Aug-14 31-Aug-13 28-Feb-14
R'000 R'000 R'000
(Reviewed) (Unaudited) (Audited)
(Restated)
Revenue 5,040 3,143 6,079
Cost of sales (37) - -
Gross profit 5,003 3,143 6,079
Other income 1,335 1,344 34
Operating and other expenses (7,841) (6,287) (21,474)
Operating loss (1,503) (1,800) (15,361)
Investment revenue 344 41 77
Loss on non-current asset held for sale - - (311)
Finance cost (591) (524) (1,124)
Loss before taxation (1,750) (2,283) (16,719)
Taxation (578) (219) (407)
Loss for the period from continuing operations (2,328) (2,502) (17,126)
Loss for the period from discontinued operations (8,203) (1,577) (2,714)
Loss for the period (10,531) (4,079) (19,840)
Weighted number of shares ('000) 804,905 508,184 508,184
Treasury shares ('000) 3,268 3,268 3,268
Net weighted number of shares ('000) 804,902 504,916 504,916
cents cents cents
Total Basic loss per share (1.31) (0.81) (3.90)
Basic loss per share from continuing operations (0.29) (0.49) (3.37)
Basic loss per share from discontinued operations (1.02) (0.32) (0.53)
Total Diluted loss per share (1.31) (0.81) (3.90)
Diluted loss per share from continuing operations (0.29) (0.49) (3.37)
Diluted loss per share from discontinued operations (1.02) (0.32) (0.53)
Total Headline loss per share (1.76) (0.75) (3.14)
Headline loss per share from continuing operations (0.30) (0.44) (2.61)
Headline loss per share from discontinued operations (1.46) (0.31) (0.53)
Total Diluted headline loss per share (1.76) (0.75) (3.14)
Diluted headline loss per share from continuing operations (0.30) (0.44) (2.61)
Diluted headline loss per share from discontinued operations (1.46) (0.31) (0.53)
Reconciliation of headline earnings R'000 R'000 R'000
Basic loss (10,531) (4,079) (19,840)
Non-recurring adjustments
Loss on disposal of property, plant and equipment (19) - 1
Loss on sale of non-current asset held for sale - 289 311
Impairment of non-current asset held for sale (3,546) - 3,546
Headline loss (14,097) (3,790) (15,982)
Condensed Consolidated Statements of other Comprehensive Income for the six months ended 31 August 2014
Six months Six months
ended ended Year ended
31-Aug-14 31-Aug-13 28-Feb-14
R'000 R'000 R'000
(Reviewed) (Unaudited) (Audited)
(Restated)
Loss for the year (10,531) (4,079) (19,840)
Other comprehensive income: - - -
Total comprehensive loss (10,531) (4,079) (19,840)
Attributable to
Loss from continuing operations (2,328) (2,502) (17,126)
Loss from discontinued operations (8,203) (1,577) (2,714)
Owners of the parent (10,531) (4,079) (19,840)
Condensed Consolidated Statements of Changes in Equity for the six months ended 31 August 2014
Share Share Non Accumulated Ordinary
Capital Premium Distibutable Loss Shareholders
Reserve Equity
R'000 R'000 R'000 R'000 R'000
Balance 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
Total comprehensive loss for the six months - - - (15,761) (15,761)
Balance at 28 Feb 2014 5,074 279,560 - (241,223) 43,411
Rights Issue March 2014 2,731 17,580 - - 20,311
Acquisition Knife Capital Proprietary Limited 1,000 7,688 - - 8,688
Total comprehensive loss for the six months - - (10,531) (10,531)
Balance at 31 Aug 2014 8,805 304,828 - (251,754) 61,879
Condensed Consolidated Statements of Cash Flow for the six months ended 31 August 2014
Six months Six months
ended ended Year ended
31-Aug-14 31-Aug-13 28-Feb-14
R'000 R'000 R'000
(Reviewed) (Unaudited) (Audited)
(Restated)
Cash outflow from operating activities in continuing operations (5,142) (4,929) (3,297)
Cash (outflow)/inflow from operating activities in discontinued operations (3,006) 315 (1,169)
Cash inflow from investing activities in continuing operations 101 - 400
Cash outflow from investing activities in discontinued operations - (293) (1,793)
Cash inflow/(outflow) from financing activities in continuing operations 21,173 (859) (1,056)
Cash inflow from financing activities in discontinued operations 282 5,419 4,966
Net cash inflow/(outflow) for period 13,408 (347) (1,949)
Cash and cash equivalents at beginning of period 7,065 9,014 9,014
Cash classified as held for sale (3,264) (6,090) (5,982)
Cash and cash equivalents at end of period 17,209 2,577 1,083
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 ("Companies Act"), and the JSE Listings Requirements.
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 consolidated interim financial statements were prepared by Dylan Kohler, Professional Accountant (SA) and supervised
by the Financial Director, EA van Heerden (CA(SA)).
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 cover Comments from the Board (Implementation of
Strategy and Prospects).
Notes to the condensed consolidated financial statements
REPORTING ENTITY
African Dawn Capital Limited is a Company domiciled in the Republic of South Africa. The reviewed condensed consolidated financial
statements of the Group for the six months ended 31 August 2014 comprise the Company and its subsidiaries and the Group`s interests
in associates and jointly controlled entities.
STATEMENT OF COMPLIANCE
The consolidated interim financial information for the six months ended 31 August 2014 has been prepared in accordance with IFRS,
the interpretations adopted by the International Accounting Standards Board (IASB) and the requirements of the 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 2014. The
results were approved by the Board on 27 November 2014.
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 2014, other than those mentioned in the basis of preparation above. For a full list
of standards and interpretations, which have been adopted, we refer you to the 28 February 2014 annual financial statements.
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 2013 and year ended 28 February 2014. During
the six months ended 31 August 2014 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.
BUSINESS COMBINATION
The company acquired 100% of the share capital of Knife Capital Proprietary Limited ("Knife Capital") on the 8th of April 2014 through
the issue of 100 000 000 Afdawn shares and R1 460 000 in cash over a period of 24 months, which cash was determined based on the
difference between Afdawn's net asset value per share as at 28 February 2014 and 10 cents per share multiplied by 100 000 000 shares
in accordance with the Knife Capital acquisition agreement and amendments thereto. The acquisition was undertaken to add
the capacity, skills, experience and intellectual property required to implement the new vision of the company.
Goodwill on the acquisition of Knife Capital, as recognised in the balance sheet, comprises intangible assets that do not qualify for
separate recognition.
R'000
Total assets at acquisition 1 670
Total liabilities at acquisition (2 097)
Net asset value at acquisition (427)
Less: Purchase price 10 148
Total goodwill and intangible assets (10 575)
The amount referred to as goodwill as required by IFRS refers to the amount paid by African Dawn for intangible assets which do not
meet the requirements of IFRS for separate recognition. These intangibles are key to executing the new Afdawn vision and as such, were
also a key consideration in the acquisition of Knife Capital. These assets include:
- Ownership of the market presence to which entrepreneurs are drawn through the education activities of Knife Capital;
- The opportunity that this market presence presents to attract entrepreneurs whose businesses have good investment potential
for Afdawn;
- The opportunity presented by the Grindstone activities to screen for businesses with good investment potential;
- The opportunity to make a step change in Afdawn's brand reputation in a manner that would contribute to Afdawn realizing its
new vision; and
- Capabilities that, by virtue of how they are managed in an integrated way, will contribute meaningfully to Afdawn realizing its new vision.
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 2014 and provisions were adjusted accordingly.
Impairment
31-Aug-14 31-Aug-13 28-Feb-14
R'000 R'000 R'000
Movement in impairment provision (79) (13) 4,647
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.
SEGMENTAL INFORMATION
Figures in ZAR thousands
31 Aug 2014 (Reviewed) Bridging Personal & Short Other Total
Finance Term
Revenue from continued operations 276 - 4,764 5,040
Revenue from discontinued operations - 13,266 - 13,266
Net profit/(loss) from continued operations 93 - (2,420) (2,328)
Net loss from discontinued operations (11) (8,193) - (8,203)
Net Asset Value (32,252) (15,827) 109,955 61,876
28 Feb 2014 (Audited) Bridging Personal & Short Other Total
Finance Term
Revenue from continued operations 678 - 5,512 6,190
Revenue from discontinued operations - 31,938 - 31,938
Net loss from continued operations (7,005) - (10,121) (17,126)
Net loss from discontinued operations (1,966) (730) (18) (2,714)
Net Asset Value (32,334) (3,829) 79,574 43,411
31 Aug 2013 (Unaudited restated) Bridging Personal & Short Other Total
Finance Term
Revenue from continued operations 321 - 2,822 3,143
Revenue from discontinued operations 21 16,036 - 16,057
Net loss from continued operations (1,133) - (1,369) (2,502)
Net loss from discontinued operations (1,454) (123) - (1,577)
Net Asset Value (35,575) (1,642) 96,389 59,172
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.
Discontinued Operations contribution to net profit/(loss)
Six months Six months
ended ended Year ended
31-Aug-14 31-Aug-13 28-Feb-14
R'000 R'000 R'000
(Reviewed) (Unaudited) (Audited)
(Restated)
Elite Group (Proprietary) Limited (11,642) (174) (365)
African Dawn Debt Management (Proprietary) Limited (11) (1,455) (1,966)
Nexus Personnel Finance (Proprietary) Limited (97) 52 (383)
Fair value adjustment to non current asset held for sale 3,547
(8,203) (1,577) (2,714)
Discontinued Operations Statement of comprehensive income
Six months Six months
ended ended Year ended
31-Aug-14 31-Aug-13 28-Feb-14
R'000 R'000 R'000
(Reviewed) (Unaudited) (Audited)
(Restated)
Revenue 13,266 16,057 31,938
Employee costs (6,354) (7,884) (14,645)
Depreciation and amortisation (334) (196) (548)
Finance costs (1,006) (1,705) (2,739)
Other expenses (17,255) (7,800) (16,720)
Loss before taxation (11,683) (1,528) (2,714)
Taxation (67) (49) -
Net loss for the period (11,750) (1,577) (2,714)
Fair value adjustment to non current asset held for sale 3,547 - -
(8,203) (1,577) (2,714)
Non current assets held for sale statement of financial position
Non-current assets 823 1,043 949
Current assets
Trade and other receivables 44,842 54,899 52,732
Intangible assets 2,546 2,410 2,843
Cash and equivalents 3,264 6,090 5,982
Other financial assets - - 807
Impairment to non-current assets held for sale - - (3,547)
Total assets 51,475 64,442 59,766
Non-current liabilities 4,032 5,207 3,592
Current liabilities 13,217 11,773 13,351
Finance lease obligation 257 380 282
Trade and other payables 2,658 4,045 3,310
Total liabilities 20,164 21,405 20,535
COMMENTS FROM THE BOARD
Implementation of strategy
Since the end of the previous financial year, the company has continued executing its strategy in pursuance of it's vision of being an
active investment holding company. To this end, management has focused on:
- Completing the rights issue,
- Concluding the Knife Capital acquisition,
- Pursuing the disposal of Elite,
- Tidying up the group structure, and
- Settling the application in terms of section 200 of the Income Tax Act No 58 of 1962 ("the Section 200 Application") with SARS.
After having consumed significant management time and attention, the planned sale of Elite in terms of a management buyout ("MBO"),
failed and the capital that would have become available as a result of the disposal did not materialize. The company did however receive
a break fee of R1,5m relating to the failed transaction. Subsequent to the failed MBO management focused considerable time and
attention on re-structuring Elite in order to improve the prospects of it being sold to a third party. This included re-negotiating various
legal arrangements, cost cutting, shortening the duration of the debtor's book and also the negotiation of a repayment plan of the Elite
convertible bond.
Changes in the micro lending industry and the tough overall economic climate has made it necessary to re-evaluate the provisioning
policy of Elite's receivables. This resulted in a significant further provision being made in the period under review. With Elite disclosed
as a discontinued operation, these additional provisions account for the greatest part of the loss recorded in the discontinued operations
for the period.
A process to simplify the Afdawn Group structure has also been implemented and as a result some subsidiaries have been earmarked
to be liquidated or deregistered.
Management has also actively focused its efforts on finalising the Section 200 Application with SARS in order to achieve certainty about
the quantum of available cash that can be earmarked for new investments. At the date of this report, finality had not yet been reached
on the Section 200 Application.
The failed MBO and the continued uncertainty about the outcome of the Section 200 Application with SARS have necessitated an
approach of cash preservation during this period. This approach together with the need for management to devote capacity to Elite
and other legacy assets has precluded the company from making any new investments.
Prospects
Elite is now positioned to trade on a positive cash flow basis. The focus will now be to free up capital tied up in Elite by either selling
off certain business units of Elite or a partial or full sale to a third party. Knife Capital has shown very strong growth in revenue. Grindstone
Accelerator (Pty) Ltd ("Grindstone") has successfully completed its first annual cycle and several of the Grindstone candidates have
received inbound investment interest. The Grindstone business model allows for transaction fees on third party investments or alternatively
a first right of refusal to invest for a period of 12 months after the first cycle. Hereto, a number of third party investment transactions
are currently in discussion, which, if successful, would result in direct transactional revenue to Grindstone. The Department of Trade and
Industry have also awarded Grindstone a grant subsequent to the reporting period.
The above factors together with ongoing efforts to sell legacy assets or alternatively to make them more ready for sale, has brought
the company much closer to entering the investment phase of its strategy. Hereto the board has approved the first tranche of investment
cash that can be allocated once the uncertainties with SARS have been resolved. In line with this positioning, the board is considering
the rebranding of the Group and has made good progress in this regard.
DIRECTORATE
The directors in office at the date of this report are:
Director Office Designation Changes
C Bull Independent Chairman Independent Non-executive Appointed 31 October 2014
WJ Groenewald Chief Executive Officer Executive (x)
HH Hickey Chair Audit Committee Independent Non-executive
V Lessing Independent Non-executive
SM Roper Independent Non-executive Appointed 22 April 2014
EA van Heerden Finance Director Executive Appointed 27 March 2014
JK van Zyl Executive Appointed 27 March 2014
A Böhmert Executive Appointed 27 March 2014
JS van der Merwe Resigned 2 June 2014
(x) Changed from acting CEO to CEO on 28 March 2014, to acting Executive Chairman on 2 June 2014 and reverted back to CEO on
31 October 2014.
SOUTH AFRICAN REVENUE SERVICES ("SARS")
Afdawn continues 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 companies to settle their tax obligations with SARS,
has been submitted and queries raised by SARS answered. 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") STATUS
Afdawn has previously 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 its 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.
NEXUS PERSONNEL FINANCE PROPRIETARY LIMITED
Nexus Personnel Finance Proprietary Limited was placed in liquidation on 12 November 2014.
DIVIDENDS
No dividends are contemplated for this period.
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 Company secretary
202 Waterfront Terraces A Rich (on behalf of Statucor Proprietary Limited)
Waterfront Road Auditors
Tygervalley Waterfront Grant Thornton
7530 Designated Advisor
Tel: +27 (12) 914 5566 PSG Capital
Transfer secretaries
Computershare Investor Services Proprietary Limited 70 Marshall Street, Johannesburg, 2001
Date: 28 November 2014
www.afdawn.co.za
Date: 28/11/2014 03:00:00 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.
Sharenet Sites 
