Wrap Text
CANCELLATION OF S366622 Unaudited consolidated statements for the six months ended 31 August 2015
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")
Unaudited Consolidated Statements
for the six months ended 31 August 2015
Consolidated Statements of Financial Position as at 31 August 2015
31 August 31 August 31 August 28 February
2015 2014 2013 2015
R'000 R'000 R'000 R'000
(Unaudited) (Restated) (Restated) (Audited)
Assets
Non-current assets
Property, plant and equipment 1 070 1 105 1 145 937
Goodwill 8 076 8 076 0 8 076
Intangible assets 5 746 8 541 2 410 6 479
Investment in associate - 3 1 663 -
14 892 17 725 5 218 15 492
Current assets
Other financial assets 354 1 727 1 412 724
Properties in possession 22 688 24 748 25 168 22 968
Trade and other receivables 38 287 53 855 75 040 39 835
Current tax receivable 397 512 95 -
Cash and cash equivalents 10 262 18 645 7 256 15 397
71 988 99 487 108 971 78 924
Total assets 86 880 117 212 114 189 94 416
Equity and liabilities
Equity
Share capital and share premium 313 943 313 943 284 634 313 943
Accumulated loss (283 678) (261 966) (230 909) (284 532)
30 265 51 977 53 725 29 411
Liabilities
Non-current liabilities
Loans from directors 121 - - 1 535
Deferred tax 1 196 1 679 - 1 365
Borrowings 11 142 10 247 25 209 13 298
Finance lease liabilities 6 135 257 60
12 465 12 061 25 466 16 258
Current liabilities
Current tax payable 14 963 18 562 18 220 14 840
Borrowings 14 054 23 144 9 001 17 782
Finance lease liabilities 122 122 124 122
Loans from directors 731 3 555 - 3 777
Operating lease liability - - - 23
Trade and other payables 14 280 7 791 7 653 11 729
Deferred income - - - 474
44 150 53 174 34 998 48 747
Total liabilities 56 615 65 235 60 464 65 005
Total equity and liabilities 86 880 117 212 114 189 94 416
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the six months ended
31 August 2015
31 August 31 August 28 February
2015 2014 2015
R'000 R'000 R'000
(Unaudited) (Restated) (Audited)
Continuing operations
Revenue 20 672 17 827 40 149
Cost of sales (1 579) (269) (268)
Gross profit 19 093 17 558 39 881
Other income 428 1 772 7 417
Operating expenses (20 303) (25 697) (65 508)
Operating loss (782) (6 367) (18 210)
Investment income 150 344 735
Profit on release from vendor liabilities 4 095 - -
Loss on fair value of contingent consideration - - (2 000)
Deemed interest expense (313) - (110)
Impairment of properties in possession - - (1 500)
Loss from equity accounted investment - (2 256) (2 259)
(Loss) / profit on disposal of property, plant and equipment (10) 19 -
Finance costs (1 750) (1 596) (8 633)
Profit/(loss) before taxation 1 390 (9 856) (31 977)
Taxation (536) (579) (1 035)
Profit/loss) from continuing operations 854 (10 435) (33 012)
Loss from discontinued operations - (11) -
Profit / (loss) for the period / year 854 (10 446) (33 012)
Profit / (loss) attributable to:
Owners of the parent:
Continuing operations 854 (10 435) (33 012)
Discontinued operations - (11) -
Total comprehensive profit / (loss) for the period / year 854 (10 446) (33 012)
Basic and diluted earnings / (loss) per share (c) from continuing operations 0.10 (1.24) (3.75)
Basic and diluted earnings / (loss) per share (c) from discontinued operations 0.00 0.00 -
Basic and diluted earnings / (loss) per share (c) 0.10 (1.24) (3.75)
Consolidated Statements of Changes in Equity for the six months ended 31 August 2015
Share Share premium Total share Accumulated loss Total equity
capital capital
Balance at 28 February 2013 (restated) 5 074 279 560 284 634 (227 707) 56 927
Total comprehensive loss for the six months
to 31 August 2013 - - - (3 202) (3 202)
Balance at 31 August 2013 5 074 279 560 284 634 (230 909) 53 725
Total comprehensive loss for the six months
01 September 2013 to 28 February 2014 (20 611) (20 611)
Balance at 28 February 2014 (restated) 5 074 279 560 284 634 (251 520) 33 114
Issue of shares 3 729 25 580 29 309 - 29 309
Total comprehensive loss for the six months to
31 August 2014 - - - (10 446) (10 446)
Balance at 31 August 2014 (restated) 8 803 305 140 313 943 (261 966) 51 977
Total comprehensive loss for the six months
01 September 2014 to 28 February 2015 - - - (22 566) (22 566)
Balance at 28 February 2015 8 803 305 140 313 943 (284 532) 29 411
Total comprehensive income for the six months to
31 August 2015 - - - 854 854
Balance at 31 August 2015 8 803 305 140 313 943 (283 678) 30 265
Consolidated Statements of Cash Flows for the six months ended 31 August 2015
Six months Six months
ended ended Year ended
31 August 2015 31 August 2014 28 February 2015
R'000 R'000 R'000
(Unaudited) (Restated) (Audited)
Cash flows from operating activities
Cash generated from / (used in) operations (refer to note 15) 4 047 (2 772) (2 280)
Investment income 150 344 735
Finance costs (1 046) (1 596) (3 115)
Tax paid (1 162) (375) (574)
Net cash from operating activities 1 820 (4 399) (5 234)
Cash flows from investing activities
Purchase of property, plant and equipment (97) (250) (346)
Proceeds on disposal of property, plant and equipment 4 19 56
Purchase of intangible assets (246) 7 -
Business combinations - - 16
Sale of business - - (396)
Net cash from investing activities (339) (224) (670)
Cash flows from financing activities - - -
Proceeds on share issue - 20 309 20 309
Borrowings repaid (6 197) (2 354) (4 003)
Finance lease payments (54) (24) (99)
Repayment of directors' loans acquired in business combinations - - (21)
Repayment of directors' loans (365) (21) (243)
Net cash from financing activities (6 616) 17 910 15 943
Total cash movement for the period / year (5 135) 13 287 10 039
Cash at the beginning of the period / year 15 397 5 358 5 358
Total cash at end of the period / year 10 262 18 645 15 397
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Reporting entity
African Dawn Capital Limited is domiciled in the Republic of South Africa. The unaudited consolidated interim financial
statements for the six months ended 31 August 2015 comprise the results of the Company and its subsidiaries ("the Group")
and the Group's interests in its associate.
2. Basis of preparation
The consolidated interim financial statements have been prepared using the historical cost convention, as modified for certain
items measured at fair value.
The consolidated interim financial statements have been prepared in accordance with:
- International Financial Reporting Standards (IFRS);
- IAS 34 - Interim Financial Reporting;
- The requirements of the South African Companies Act (Act No 71 of 2008), as amended;
- The JSE Listings Requirements;
- The SAICA Financial Reporting Guides as issued by the Accounting Practices Committee; and
- The Financial Pronouncements as issued by the Financial Reporting Standards Council.
These consolidated interim financial statements should be read in conjunction with the annual financial statements for the
year ended 28 February 2015.
3. Approval
The consolidated interim financial statements were prepared by D Kohler Professional Accountant (SA) and supervised by the
CEO and the Company's IFRS consultant. They were approved by the Board on 21 December 2015.
4. Significant accounting policies
The accounting policies adopted in the preparation of the consolidated interim financial statements are consistent with those
applied in the consolidated annual financial statements for the year ended 28 February 2015. For a full list of standards and
interpretations, which have and have not been adopted, refer to the 28 February 2015 consolidated annual financial
statements.
5. Significant judgements and 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.
In preparing these consolidated interim financial statements, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied in the
consolidated financial statements for the year ended 28 February 2015 (refer to note 1.20 of the consolidated annual financial
statements for the year ended 28 February 2015).
6. Significant transactions
As announced on SENS on 1 July 2015, the vendors of Knife Capital released Afdawn Group from the second NAV liability,
the share issue liability and the contingent liability relating to the additional remuneration. (Refer to notes 20, 37 and 45 in the
consolidated annual financial statements for the year ended 28 February 2015).
As a result of this, a profit of R4 095 000 has been recognised in profit or loss, made up as follows:
- Second NAV liability (a) R2 095 000
- Share issue liability (b) R2 000 000
(a) The debit of R2 095 000 was previously recognised as part of the purchase price and thus affected goodwill.
(b) The debit of R2 000 000 was previously recognised in profit or loss (loss on fair value relating to contingent consideration).
7. Reclassifications and prior period errors relating to August 2014 and August 2013
August 2014 – prior period errors
Refer to notes 13 and 14 which explain the prior period errors and the impact on the Knife purchase price and the allocation thereof to
the net assets.
August 2014 and August 2013 – prior period errors
Refer to notes 13 and 14 which explain the prior period errors relating to the equity accounting of Elite Two.
August 2014 and August 2013 – reclassifications
Refer to notes 13 and 14 which explain the reclassifications relating to Elite, Elite Cell Captive and Nexus as a result of these
no longer being discontinued operations.
8. Business combinations
There were no business combinations or disposals in the six-month period to 31 August 2015.
Refer to note 37 in the consolidated annual financial statements for details of the acquisition of the Knife Capital Group in March 2014. This has
been recognised in the year ended 28 February 2015 (and therefore also in the six-month interim period to 31 August 2014).
Refer to notes 13 and 14 in this consolidated interim report which explain the prior period errors as at August 2014 relating to
the Knife purchase price and the allocation thereof.
9. Restrictions, guarantees and contingencies
The restrictions, guarantees and contingencies are the same as those disclosed in the consolidated annual financial
statements for the year ended 28 February 2015 (refer to notes 39, 45, 47 and 49) in the consolidated annual finanial statements for the year ended 28 February 2015.
10. Events after the reporting period
Other than as explained below, the events after the reporting period are the same as those disclosed in the consolidated annual financial
statements for the year ended 28 February 2015:
Elite Group transaction
As announced on SENS on 7 December 2015, Afdawn has entered into an agreement to dispose of a portion of Elite Group ("the Transaction").
The Transaction will establish a new black-empowered financial services business, Dzothe Finance Solutions, with Elite's technology forming
the basis of its lending platform. The Transaction capitalises Elite for future growth and positions Afdawn to participate in the growth of this
newly established black-empowered financial services business.
Knife Capital
Subsequent to the period end and the publication of the annual report, Knife Capital was notified of an amendment to the terms of a contract.
As a result of this an impairment of approximately R2 000 000 has arisen and will be recognised in the year ended 29 February 2016.
11. Impairment of trade and other receivables
The carrying amount of trade and other receivables was assessed for impairment at the interim dates and resulted in the following
changes:
Impairment
31-Aug-15 31-Aug-14 28-Feb-15
R'000 R'000 R'000
Movement in impairment provision (1 593) (708) (35 824)
12. Segment report
The Group's reportable segments are unchanged from those disclosed in the consolidated annual financial statements for
the year ended 28 February 2015. The segment report for the six-month period to 31 August 2014 has been restated to
comply with this format.
All the segments operate only in South Africa, largely in the Gauteng and Western Cape provinces therefore no
geographical information is provided. Similarly all non-current assets are in South Africa.
31 August 2015
Investment
advisory and Rentals of
investment properties in
management Micro finance possession Other Total
R'000 R'000 R'000 R'000 R'000
Revenue 5 157 12 366 2 715 434 20 672
Cost of sales (1 653) (61) - 135 (1 579)
Other income 1 426 - 1 428
Investment income 57 246 1 (154) 150
Finance costs - (760) (372) (618) (1 750)
Operating expenses (2 990) (11 021) (1 711) (4 581) (20 303)
Impairment trade receivables - (2 040) 447 - (1 593)
Bad debts written off - 3 266 23 - 3 289
Gain on release from vendor liabilities - - - 4 095 4 095
Deemed interest expense - (199) - (114) (313)
Loss on sale of property, plant and equipment - (6) - (4) (10)
Profit/(loss) before taxation 572 736 632 (550) 1 390
Taxation (190) - (177) (169) (536)
Total comprehensive profit/(loss) 382 736 455 (719) 854
Total assets 4 129 30 304 20 608 31 839 86 880
Total liabilities 1 509 43 454 21 437 (9 786) 56 615
Intangible assets 4 726 1 020 - - 5 746
Goodwill 8 076 - - - 8 076
Property, plant and equipment 80 623 11 356 1 070
31 August 2014
Investment
advisory and Rentals of
investment properties in
management Micro finance possession Other Total
R'000 R'000 R'000 R'000 R'000
Revenue 2 837 12 752 2 619 (381) 17 827
Cost of sales (1 188) (105) - 1 023 (269)
Other income - 456 - 1 316 1 772
Investment income 3 - 1 339 344
Finance costs (1) (1 006) (380) (208) (1 596)
Operating expenses (1 868) (21 725) (1 230) (874) (25 697)
Impairment trade receivables - (2 933) (145) 2 371 (708)
Bad debts written off - (5 378) (43) - (5 421)
Equity accounted loss - (2 256) - - (2 256)
Profit on disposal of property,
plant and equipment - - - 19 19
(Loss)/profit before taxation (216) (11 884) 1 009 1 236 (9 856)
Taxation (296) - (283) - (579)
Discontinued operations - - - (11) (11)
Total comprehensive profit/(loss) (512) (11 884) 726 1 224 (10 446)
Total assets 1 741 35 403 22 302 57 767 117 212
Total liabilities 2 036 43 954 22 622 (3 377) 65 235
Intangible assets 5 995 2 546 - - 8 541
Goodwill 8 076 - - - 8 076
Property, plant and equipment 40 823 - 241 1 105
13. Changes to prior year amounts
Prior year amounts have been restated (as indicated in note 14) and as explained below:
Discontinued operations - reclassifications
Elite – reclassification from discontinued to continuing operations
The results of Elite have been reclassified from discontinued operations to continuing operations, for all reporting periods.
The amounts for prior periods are described as having been re-presented.
Elite Cell – reclassification from discontinued to continuing operations
The results of Elite Cell have been reclassified from discontinued operations to continuing operations, for all reporting
periods. The amounts for prior periods are described as having been re-presented
Nexus - reclassification from discontinued to continuing operations
The results of Nexus have been reclassified from discontinued operations to continuing operations, for all reporting periods.
The amounts for prior periods are described as having been re-presented.
As disclosed in the year ended 28 February 2015, Nexus went into liquidation in October 2014.
Material prior period errors and other reclassifications
The prior period amounts have been restated for material prior period errors and additional items that have been
reclassified as explained below:
Knife Capital Group acquisition (2014)
The acquisition of the Knife Capital Group was not correctly accounted for, in terms of IFRS 3 – Business Combinations, in
the six-month period to 31 August 2014.
The impact of the restatements is as follows:
Goodwill increased by R4 046 000
Intangible assets decreased by (R2 000)
Deferred tax liability increased by (not recognised on the acquired intangible assets) (R1 833 000)
Loans to directors increased by (second NAV top-up as a result of
28 February 2014 prior period errors) (R2 095 000)
Share capital and share premium increased (R312 000)
Trade payables decreased by R196 000
In addition, the amortisation of the intangible assets led to a reversal of a portion of the deferred tax liability of R1 833 000
referred to above. The impact of this is that the deferred tax liability decreases by R154 000 with an equivalent credit in
profit or loss.
Elite trade receivables - doubtful debt impairment error (2014 and 2013)
As disclosed in the year ended 28 February 2015, a material prior period error relating to the additional impairment of trade receivables
in Elite was discovered during the year.
It is impracticable to determine the impact as at 31 August 2013 because management would have to re-create debtors'
records which would involve too much subjectivity. The impairment was therefore recognised in the year ended
28 February 2014. There was no adjustment required to the amount originally recognised as at 31 August 2014.
The Company did not recognise any taxation during 2014 and 2013 and does not recognise deferred tax on assessed losses
because it does not meet the requirements in IAS 12. As a result, the prior year period has no impact on tax or
deferred tax.
Elite Two error (2014 and 2013)
As disclosed in the year ended 28 February 2015, Elite had significant influence over Elite Two from 2011 until it obtained
control in November 2014. In light of the fact that Elite had not previously accounted for any investment in an associate,
no equity accounted earnings relating to Elite Two were recognised in the six-month periods 31 August 2014 and 31 August 2013.
The adjustment resulted in R2,256 million being recognised as a profit from the equity account investment in the six-month
period to 31 August 2014.
The Company did not recognise any taxation during 2014 and 2013 and does not recognise deferred tax on assessed losses
because it does not meet the requirements in IAS 12. As a result, the prior period adjustment has no impact on tax or
deferred tax.
Non-cash items in the cash flow statement (2014)
As disclosed in the year ended 28 February 2015, several non-cash items were previously not adjusted against the loss from
operations to arrive at the cash generated from operations. These have subsequently been adjusted in the six-month
period to 31 August 2014.
This prior period adjustment has no impact on tax or deferred tax.
The impact of the 2014 restatements on loss and loss per share as well as headline loss and headline loss per share is as
follows:
Loss per share from continuing operations 31 August 2014 Gross amount Tax effect Impact
R'000 R'000 cents per
share
Loss as previously reported (2 328) - (0.29)
Knife acquisition error 154 - 0.02
Elite cell error (69) - (1.01)
Reclassification of discontinued operations to continuing (8 192) - (1.02)
Weighted average adjustment for rights issue 2015 (A) 0 - 0.06
(10 435) - (1.24)
Loss per share discontinued operations 31 August 2014 Gross amount Tax effect Impact
R'000 R'000 cents per
share
Loss as originally stated (8 203) - (1.02)
Reclassification of discontinued operations to continuing 8 192 - 1.02
Weighted average adjustment for rights issue 2015 (A) 0 - 0.00
(11) - 0.00
Headline loss per share from continuing operations 31 August 2014 Gross amount Tax effect Impact
R'000 R'000 cents per
share
Headline loss as previously reported (5 894) - (0.73)
Profit on disposal of property, plant
and equipment (tax effect not previously shown 0 5 0.00
Impairment reclassification reversal) 3 547 - 0.44
Reclassifications of discontinued operation to continuing (8 192) - (1.02)
Elite cell (69) - (0.02)
Knife Capital 154 - 0.02
Weighted average adjustment for rights issue 2015 (A) 0 - 0.06
(10 454) 5 (1.24)
Headline loss per share from discontinued operations 31 August 2014 Tax effect HEPS effect in
Gross amount R'000 cents per
R'000 share
As originally stated (8 203) - (1.02)
Reclassification from discontinued operations to continuing 8 192 - 1.02
Weighted average adjustment for rights issue 2015 (A) - - 0.00
(11) - -
(A) This relates to the rights issue that took place in the 2015 financial year – refer to the annual financial statements,
for the year ended 28 February 2015.
14. Comparative amounts
The effects of the restatements and reclassifications explained in note 42 in the consolidated annual financial statements for the year 28 February 2015 affected most
disclosure items indicated in the following tables:
As Elite Two
previously Debtors equity Elite Cell Reclassifi-
reported Elite impairment accounting Captive Knife Impairment cation and
Aug 2014 reclassification error error error acquisition reclassified rounding Total
Non-current assets
Property, plant and
equipment 282 823 - - - - - - 1 105
Intangible assets 5 995 2 546 - - - (2) - 2 8 541
Goodwill 4 030 - - - - 4 046 - - 8 076
Investment in associate - 2 259 - (2 256) - - - - 3
10 307 5 628 - (2 256) - 4 044 - 2 17 725
Current assets
Properties in possession 24 748 - - - - - - - 24 748
Trade and other receivables 19 900 44 785 (14 188) - (189) - 3 547 - 53 855
Other financial assets - 1 554 - - 173 - - - 1 727
Current tax receivable 131 381 - - - - - - 512
Cash and cash equivalents 17 208 1 437 - - - - - - 18 645
61 987 48 157 (14 188) - (16) - 3 547 - 99 487
Non-current assets held for
sale 51 475 (50 184) - 2 256 - - (3 547) - -
Total assets 123 769 3 601 (14 188) - (16) 4 044 - 2 117 212
Equity
Share capital and share
premium 313 633 - - - - 312 - (2) 313 943
Accumulated loss (251 754) (10 297) - - (69) 154 - - (261 966)
61 879 (10 297) - - (69) 466 - (2) 51 977
Non-current liabilities
Borrowings 8 985 2 787 - - - - - (1 525) 10 247
Deferred tax liabilities - - - - - 1 679 - - 1 679
Finance lease liabilities - 135 - - - - - - 135
8 985 2 922 - - - 1 679 - (1 525) 12 061
Current liabilities
Loans from directors (Knife
vendors) - - - - - 2 095 - 1 460 3 555
Borrowings 8 616 14 462 - - - - - 66 23 144
Current tax payable 18 563 344 (344) - - - - (1) 18 562
Finance lease liabilities - 122 - - - - - - 122
Operating lease liability 9 - - - - - - (9) -
Trade and other payables 5 553 2 368 - - 53 (196) - 13 7 791
32 741 16 952 - - 53 1 899 - 1 529 53 174
Liabilities of disposa
groups 20 164 (20 164) - - - - - - -
Total liabilities 61 890 (290) - - 53 3 578 - 4 65 235
Total equity and liabilities 123 769 (10 587) - - (16) 4 044 - 2 117 212
Statement of comprehensive income 31 August 2014
As Reclassification Elite Two
Statement of Profit or Loss previously Nexus equity Elite Cell Knife Reclassifi
and Other Comprehensive reported Elite discontinued accounting Captive acquisition Impairment cation and
Income - 2014 Aug 2014 Reclassification operation error error error reclassified rounding Total
Revenue 5 040 13 231 35 - (479) - - - 17 827
Cost of sales (37) (170) (127) - 65 - - - (269)
Gross profit 5 003 13 061 (92) - (414) - - - 17 558
Other income 1 335 456 - - - - - (19) 1 772
Operating expenses (7 841) (24 130) (5) 2 256 322 154 3 547 0 (25 697)
Operating loss (1 503) (10 613) (97) 2 256 (92) 154 3 547 (19) (6 367)
Investment income 344 44 - - (44) - - - 344
Profit on disposal of
property, plant and equipment - - - - - - - 19 19
Loss from equity
accounted investment - - - (2 256) - - - - (2 256)
Finance costs (591) (1 006) - - - - - 1 (1 596)
Loss for the period before
tax (1 750) (11 575) (97) - (136) 154 3 547 1 (9 856)
Taxation (578) (67) - - 67 - (1) (579)
Loss for the period from
continuing operations (2 328) (11 642) (97) - (69) 154 3 547 - (10 435)
Loss from discontinued
operations (8 203) 11 642 97 - - - (3 547) - (11)
Loss for the period (10 531) - - - (69) 154 - - (10 446)
Other comprehensive
income - - - - - - - - -
Total comprehensive loss
for the period (10 531) - - - (69) 154 - - (10 446)
Statement of changes in equity
Equity
As accounted
previously Debtors instrument Impairment Elite Cell Knife Reclassifi-
Statement of Changes in reported impairment prior error error prior reclassified Captive acquisition cation and
Equity - 2014 Aug 2014 year year prior year error error rounding Total
Total share capital 313 633 - - - - 312 (2) 313 943
Accumulated loss (251 754) (10 297) - - (69) 154 - (261 966)
Total equity 61 879 (10 297) - - (69) 466 (2) 51 977
Statement of Financial Position – 2013
Elite Two Elite Two
equity Elite debtors Reclassification Reclassification equity Reclassification
As previously accounting impairment Elite Nexus accounting Elite Cell PIP from
reported error prior error prior discontinued discontinued error discontinued receivables Total
Aug 2013 year year operation operation current operation and rounding Restated
Statement of Financial Position - 2013
Non-current assets
Property, plant and equipment 102 - - 1 043 - - - - 1 145
Intangible assets - - - 2 410 - - - - 2 410
Investment in associate - 787 - - - 876 - - 1 663
102 787 3 453 - 876 - - 5 218
Current assets
Properties in possession 21 327 - - - - - - 3 841 25 168
Trade and other receivables 31 436 - (7 455) 54 899 - - - (3 840) 75 040
Other financial assets - - - - - - 1 412 - 1 412
Current tax receivable 95 - - - - - - - 95
Cash and cash equivalents 2 577 - - 4 678 - - - 1 7 256
55 435 - (7 455) 59 577 - - 1 412 2 108 971
Non-current assets held for sale 64 442 - - (63 030) - - (1 412) - -
Total assets 119 979 787 (7 455) - - 876 - 2 114 189
Equity
Share capital and share premium 284 634 - - - - - - - 284 634
Accumulated loss (225 462) 787 (7 111) - - 876 - 1 (230 909)
59 172 787 (7 111) - - 876 - 1 53 725
Non-current liabilities
Borrowings 9 474 - - 15 735 - - - - 25 209
Finance lease liabilities - - - 257 - - - - 257
9 474 - - 15 992 - - - - 25 466
Current liabilities
Borrowings 7 756 - - 1 245 - - - - 9 001
Current tax payable 18 188 - (344) 283 - - 93 - 18 220
Finance lease liabilities - - - 124 - - - - 124
Trade and other payables 3 984 - - 3 555 - - 113 1 7 653
29 928 - (344) 5 207 - - 206 1 34 995
Liabilities of disposal groups 21 405 - - (21 199) - - (206) - -
Total liabilities 60 807 - (354) - - - - 1 60 464
Total equity and liabilities 119 979 787 (7 455) - - 876 - 2 114 189
Elite Two Elite Two
equity Elite debtors Reclassification Reclassification equity
As previously accounting impairment Elite Nexus accounting Elite Cell Reclassification
Statement of Profit or Loss and Other reported error prior error prior discontinued discontinued error discontinued PIP from Total
Comprehensive Income - 2013 Aug 2013 year year operation operation current operation receivables Restated
Revenue 3 143 - 15 196 282 - 580 (385) 18 816
Cost of sales - - (95) (185) - (495) 185 (590)
Gross profit 3 143 - - 15 101 97 - 85 (200) 18 226
Other income 1 344 - 500 3 - - - 1 847
Operating expenses (6 287) - (7 455) (6 342) (48) - (348) 200 (20 280)
Operating loss (1 800) - (7 455) 9 259 52 - (263) - (207)
Investment income 41 - 1 - - 38 - 80
Profit from equity accounted
investment - 787 (787) - 876 - - 876
Finance costs (524) (1 705) - - - - (2 229)
Loss for the period before tax (2 283) 787 (7 455) 6 768 52 876 (225) - (1 480)
Taxation (219) 344 (360) - - (33) - (268)
Loss for the period from continuing
operations (2 502) 787 (7 111) 6 408 52 876 (258) - (1 748)
Loss from discontinued operations (1 577) (84) (52) - 258 - (1 455)
Loss for the period (4 079) 787 (7 111) 6 324 - 876 - - (3 203)
Other comprehensive income - - - - - - -
Total comprehensive loss for the
period (4 079) 787 (7 111) 6 324 - 876 - - (3 203)
Statement of Changes in equity
Elite Two Elite Two
equity Elite debtors Reclassification Reclassification equity
As previously accounting impairment Elite Nexus accounting Elite Cell Reclassification
reported error prior error prior discontinued discontinued error discontinued PIP from Total
Aug 2013 year year operation operation current operation receivables Restated
Statement of Changes in Equity -
2013
Share capital 5 074 - - - - - - - 5 074
Share premium 279 560 - - - - - - - 279 560
Total share capital 284 634 - - - - - - - 284 634
Accumulated loss (225 462) 787 (7 111) - - 876 - 1 230 909
Total equity 59 172 787 (7 111) - - 876 - 1 53 725
15. Cash generated from / (used in) operations
31-Aug-15 31-Aug-14 28-Feb-15
R'000 R'000 R'000
Profit/(loss) before taxation 1 390 (9 856) (31 977)
Adjustments for:
Depreciation 150 239 424
Loss/(profit) on disposal of property, plant and equipment 10 (19) 23
Movement in operating lease liability (23) (174) (151)
Gain on present value adjustments on interest free - - (661)
borrowings
Equity accounted loss - 2 256 2 259
Investment income (150) (344) (735)
Finance costs 1 398 1 596 3 115
Fair value of contingent consideration - - 2 000
Profit on release from vendor liabilities (4 095) - -
Non-cash finance costs (penalties and interest on income tax) 5 518
Amortisation 779 839 1 758
Deemed interest expense 313 - 110
Profit on disposal of Nexus - - (3 231)
Impairment of properties in possession - - 1 500
Non-cash portion of NHFC guarantee - - 1 750
Impairment of intangible asset - - 1 150
Changes in working capital:
Properties in possession 280 - 280
Trade and other receivables 1 548 5 192 14 798
Trade and other payables 2 551 (2 328) (1 514)
Deferred income (474) - 474
Other financial assets 370 (173) 830
4 047 (2 772) (2 280)
16. Related parties
Related party relationships – other than as disclosed below, there have been no significant changes from the disclosures in the consolidated annual
financial statements for the year ended 28 February 2015.
Executive and non-executive directors As per directors' report in the consolidated annual financial statements
for the year ended 28 February 2015
CM Bull (Resigned 12 June 2015)
Other key management
DD Breedt
GE Stoop (Resigned 11 August 2014)
DA Turner (Resigned 11 August 2014)
Related party transactions 31 August 2015
R'000
Release from obligation to settle liabilities relating to the
acquisition of Knife Capital
EA van Heerden 1,365
JK van Zyl 1,365
A Bohmert 1,365
Cash paid to directors relating to the acquisition of Knife Capital
EA van Heerden 122
JK van Zyl 122
A Bohmert 122
17. Earnings / (loss) per share
Basic and diluted earnings / (loss) per share
Basic and diluted earnings / (loss) per share are calculated by dividing the profit / (loss) attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue during the period (excluding ordinary shares held as
treasury shares).
31 August 2015 31 August 2014
Basic and diluted earnings / (loss) per share
From continuing operations (c) 0.10 (1.24)
From discontinued operations (c) - -
0.10 (1.24)
Reconciliation of weighted average number of
ordinary shares
Number of ordinary shares in issue 880 271 508,184
Adjusted for:
Rights issue - 246,345
Shares issued Knife Capital Group acquisition 28 March - 85,326
2014
Weighted average number of shares used for loss
and headline loss per share 880 271 839 855
Headline and diluted headline earnings / (loss) per share
From continuing operations (c) 0.10 (1.24)
From discontinuing operations (c) - -
Total 0.10 (1.24)
Headline earnings / reconciliation
Profit/(loss) for the period for continuing operations 854 (10 435)
Adjusted for:
Loss / (profit) on disposal of property, plant and equipment 10 (19)
Tax effect on disposal of property, plant and equipment (3) 5
Headline profit/(loss) - continuing operations 861 (10 449)
Loss for the period – discontinued operations - (11)
Headline earnings/(loss) for the period 861 (10 460)
COMMENTS FROM THE BOARD
REVIEW FOR THE PERIOD
The board is pleased to report that the results for the six-month period ended 31 August 2015 show an improvement on the comparable period ended
31 August 2014 and also an improvement on 28 February 2015. In comparison to the period ended 31 August 2014 revenue increased from R17,8 million
to R20,7 million and operating expenses decreased from R25,7 million to R20,3 million. The loss reduced from R10,4 million to a profit of R854 000.
The release of R4,09 million of Knife Capital Vendor liabilities and reduced finance costs had the net effect of a Headline Earnings per share of
0.10 cents versus a Headline Loss per share 1,24c for the comparable period. The results were also affected by increased audit and consulting expenses
related to the prior year error. The repayment of R6.6 million of liabilities and R1,8 million cash generated from operations resulted in a decrease of
cash resources by R5,1 million to R10,2 million.
All the main operating entities made a profit in the 2015 interim period
DIRECTORATE
The directors in office at the date of this report are:
Director Office Designation Changes
Chief Executive Officer
(CEO) and acting
WJ Groenewald Chairman Executive(a)
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 Chief Financial Executive Appointed 27 March 2014
Officer
JK van Zyl Executive (b)
A Böhmert Executive Appointed 22 April 2014
JS van der Merwe Chairman Non-executive (c) Resigned 2 June 2014
CM Bull Chairman Independent Non-executive Appointed 31 October 2014, resigned
12 June 2015
(a) Appointed CEO on 28 March 2014 and acting Chairman from 4 June 2014 – 31 October 2014. Currently acting Chairman from 12 June 2015.
(b) Changed from non-executive to Executive on 28 March 2014.
(c) Changed from Executive to Non-executive on 24 February 2014.
GOING CONCERN
These results have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be
available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments
will occur in the ordinary course of business.
Certain material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going concern were
outlined in note 1.20 of the Annual Financial Statements for the year ended 28 February 2015. The following actions were implemented to reduce
these uncertainties:
- Timing of the amount payable to SARS (please refer to SARS note below)
- Ability of Afdawn and all of its subsidiaries to meet ongoing commitments. The risk of this uncertainty materialising in a manner that could affect
the relevance of the going concern assumption could arise:
- The Elite transaction (as anounced on 7 December 2015) will recapitalise Elite and provide access to funding to grow the business. Sandown has
also agreed to lengthen the term of the loan to April 2017. Afdawn will receive a R1.37 million cash injection and will receive a monthly management fee.
- Almika sales continue to proceed as expected and a further 17 units were transferred after year-end. A further 22 units are exprected to
be transferred during the next three months.
- The Knife Capital settlement announced on 01 July 2015 reduced the Knife Capital vendor liability by R4 million.
- The Group also reduced debt during the period by R6 million while cash balances decreased by R5.1 million.
SOUTH AFRICAN REVENUE SERVICES ("SARS")
A Section 200 application was made in June 2013 and was declined in May 2015 on the basis that Afdawn Group's financial position did not warrant a
compromise. A new submission has subsequently been made to SARS in October 2015 with a view to reaching a settlement on this. The current relationship
with SARS is constructive and conducive to an amicable outcome.
A liability has been recognised in full for all interest and penalties that are payable to SARS.
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 its previous conclusion. At the date of signing this interim report no claims
have been received by Afdawn, nor has it 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' (a wholly-owned subsidiary of Afdawn) facility of
R5 million became payable in October 2013. Nexus had ceded its debtors book as security for payment of the amount. NHFC demanded payment
from Afdawn. Nexus was liquidated in October 2014 and NHFC instituted arbitration proceedings against Afdawn for the payment of R5 million
plus interest and costs in terms of the settlement agreement. In terms of the out-of-court settlement, Afdawn is, by virtue of being guarantor,
liable for payment of an amount of R3,75 million. R2 million was paid on 6 February 2015 and R1.75 million was repaid on 20 September 2015.
RESTRUCTURING OF THE AFDAWN BOARD
The Board is pleased to announce that Mr Graham Hope will join the Board as Chief Financial officer with effect from 11 January 2016. Graham brings a
wealth of experience to the Group and he will also serve as FD in both Dzothe Finance Solutions and Elite Group. As previously announced Eben van Heerden
will step down as Chief Financial Officer and will focus on his role as CEO of Knife Capital. Furthermore, the Board will consist of only two
executive directors, being the Group CEO and the Group FD, with the rest being non-executive directors as from 11 January 2014.
DIVIDENDS
No dividends have been declared for this interim period (August 2014: R0).
PROSPECTS
As stated in the memorandum published on 8 December 2015 clarification on vision and strategy will be announced in due course.
The SARS liabilities remains the main risk to the Group going forward.
ADMINISTRATION
Registered office Company secretary
202 Waterfront Terraces A Rich (on behalf of Statucor Proprietary Limited)
Waterfront Road Auditors
Tygervalley Waterfront Grant Thornton Cape Inc.
7530 Designated Advisor
Tel: +27 (12) 914 5566 PSG Capital
Transfer secretaries
Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001
Date: 22 December 2015
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