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AFRICAN DAWN CAPITAL LIMITED - Unaudited Consolidated Statements for the six months ended 31 August 2015

Release Date: 23/12/2015 07:35
Code(s): ADW     PDF:  
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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             17 296            (344)            -            53        1 899             -        1 529     53 174

Liabilities of disposal

groups                           20 164           (20 164)                -            -             -            -             -            -          -

Total Liabilities                61 890                 54            (344)            -            53        3 578             -            4     65 235

Total Equity and Liabilities    123 769           (10 243)            (344)            -          (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                                             

                                               As         equity    Elite debtors    Reclassification    Reclassification        equity                 Reclassification            

                                       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     34 998

Liabilities of disposal groups             21 405              -                -            (21 199)                   -             -          (206)                 -          -

Total Liabilities                          60 807              -            (344)                   -                   -             -              -                 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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