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AFRICAN DAWN CAPITAL LIMITED - CANCELLATION OF S372272 Provisional consolidated audited annual financial statements for the year ended 29 February 2016

Release Date: 01/06/2016 15:34
Code(s): ADW     PDF:  
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CANCELLATION OF S372272 Provisional consolidated audited annual financial statements for the year ended 29 February 2016

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")



Provisional consolidated annual financial statements for the year ended 29 February 2016



-   Revenue declined by R2.8 million to R37.3 million

-   Operating expense was reduced by R22.7 million to R42.8 million as result of cost cutting and lower impairments in Elite. 

    Head office expenses were higher as result of increase audit and legal cost 

-   Operating loss was reduced by R15.8 million to R2,4 million

-   Finance Cost was reduced by R5.6 million to R3.0 million

-   Loss for the year declined by R26.1 million to R6.9 million. The Green Oaks Property was impaired by a further 

    R3,2 million  to reflect the estimated sales price. 

-   Borrowings were reduced by R10.7 million to R20.3 million 

-   Loans from directors were reduced after the Knife Capital vendor released Afdawn for these liabilities.

-   Net Cash from operating activities improved by R5.7 million as a result of a better performance of Elite

-   The outstanding SARS matter is still a key risk to the sustainability of the Group, and a material uncertainty 

    still exists on the Company and Group’s ability to continue as a going concern.



Statement of Financial Position as at 29 February 2016

                                                                                 2016              2015

                                                                 Notes         R '000            R '000  

Assets                          

Non-Current Assets                          

Property, plant and equipment                                                     879               937

Goodwill                                                                        8,076             8,076

Intangible assets                                                               5,155             6,479

Deferred tax                                                                      381                -

                                                                               14,491            15,492

Current Assets                          

Other financial assets                                                            312               724

Properties in possession                                           2           18,247            22,968

Trade and other receivables                                        3           35,981            39,835

Current tax receivable                                             4                -                 -

Cash and cash equivalents                                                       3,005            15,397

                                                                               57,545            78,924

Total Assets                                                                   72,036            94,416

Equity and Liabilities                          

Equity                          

Share capital and share premium                                    5          313,943           313,943

Accumulated loss                                                            (291,442)         (284,532)

                                                                               22,501            29,411

Liabilities                          

Non-Current Liabilities                          

Loans from directors                                               7                -             1,535

Deferred tax                                                                    1,125             1,365

Borrowings                                                         6           12,524            13,298

Finance lease liabilities                                                           -                60

Current Liabilities                                                            13,649            16,258

Current tax payable                                                4           15,054            14,840

Borrowings                                                         6            7,829            17,782

Finance lease liabilities                                                          19               122

Loans from directors                                               7              487             3,777

Operating lease liability                                                          28                23

Trade and other payables                                           8           12,469            11,729

Deferred income                                                                     -               474

                                                                               35,886            48,747

Total Liabilities                                                              49,535            65,005

Total Equity and Liabilities                                                   72,036            94,416



Statement of Profit or Loss and Other Comprehensive Income

                                                                                 2016              2015

                                                                                R'000             R'000

                                                               Notes

Revenue                                                           9            37,329            40,149

Cost of sales                                                                   (839)             (268)

Gross profit                                                                   36,490            39,881

Other income                                                     10             3,910             7,417

Operating expenses                                                           (42,836)          (65,508)

Operating loss                                                   11           (2,436)          (18,210)

Investment income                                                                 346               735

Profit/(Loss) on fair value movement - contingent consideration   7             2,000           (2,000)

liability  

                                                                                    -                 -    

Deemed interest expense                                                         (552)             (110)

Impairment to properties in possession                            2           (3,284)           (1,500)

(Loss) from equity accounted investment                                             -           (2,259)

Finance costs                                                    12           (3,018)           (8,633)

Loss before taxation                                                          (6,944)          (31,977)

Taxation                                                                           34           (1,035)

Loss for the year                                                             (6,910)          (33,012) 



Loss attributable to:    

Owners of the parent                                                          (6,910)          (33,012) 

                                                                              (6,910)          (33,012) 

Basic and diluted loss per share (c)                             17            (0.79)            (3.84)

  

Statement of Changes in Equity                                                        

                                                         Share capital Share premium   Total share   Accumulated   Total equity

                                                                                           capital          loss                                                                                                       

                                                                 R'000         R'000         R'000         R'000          R'000

Balance at 01 March 2014                                         5,074       279,560       284,634     (251,520)         33,114

Total comprehensive loss for the year                                -             -             -      (33,012)       (33,012)

Issue of shares                                                  3,729        25,580        29,309             -              -

Total contributions by and distributions to owners of            3,729        25,580        29,309             -         29,309

company recognised directly in equity

Balance at 28 February 2015                                      8,803       305,140       313,943     (284,532)         29,411

Total comprehensive loss for the year

                                                                                                         (6,910)        (6,910)

Balance at 29 February 2016                                      8,803       305,140       313,943     (291,442)         22,501

                                                                                                       

Note(s)                                                            5             5            5



Statement of Cash Flows   

                                                                                   2016             2015

                                                                 Notes           R '000           R '000                                   

Cash flows from operating activities                         

Cash generated by/(used in) operations                            14              3,490          (2,280)

Interest income                                                                     346              735

Finance costs                                                     12            (2,080)          (3,115)

Tax paid                                                                        (1,307)            (574)

Net cash from operating activities                                                  449          (5,234)

Cash flows from investing activities             

Purchase of property, plant and equipment                                         (570)            (346)

Proceeds on disposal of property, plant and                                         248               56

equipment              

Purchase of intangible assets                                                     (346)                -

Business combinations                                                                 -               16

Sale of business                                                                      -            (396)

Net cash from investing activities                                                (668)            (670)

Cash flows from financing activities             

Proceeds on share issue                                                               -           20,309

Borrowings (repaid) / raised                                       6           (11,280)          (4,003)

Finance lease payments                                                            (163)             (99)

Repayment of directors' loans acquired in business                                    -             (21)

combinations             

Repayment of directors' loans                                      7              (730)            (243)

Net cash from financing activities                                             (12,173)           15,943

Total cash movement for the year                                               (12,392)           10,039

Cash at the beginning of the year                                                15,397            5,358

Total cash at end of the year                                                     3,005           15,397



Statement of compliance

These condensed provisional consolidated financial statements have been prepared in accordance with the

International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, 

IAS 34: Interim Financial Reporting, the Johannesburg Stock Exchange ("JSE") Listings Requirements, the requirements

of the South African Companies Act, as amended and the SAICA financial reporting pronouncements as issued by the 

FRSC, SAICA financial reporting Guidelines as issued by the APC.



Changes in accounting policies and basis of preparation

The accounting policies applied in the preparation of these financial statements are in terms of IFRS and are consistent

with those applied in the previous financial period, save for as disclosed below.



New and revised standards that are effective for annual periods beginning on or after 1 March 2015



The Group has early adopted an amendment to IAS 27 – Separate Financial Statements, which permits entities to use the

equity method to account for investments in subsidiaries, joint ventures and associates in their financial statements. The

Group has elected to apply the equity method to account for investments in associates in the separate financial statements

of the investor.



A number of new and revised standards are effective for annual periods beginning on or after 1 March 2015. Information

on these new standards is presented below. None of these have an impact on the recognition and measurement of assets

and liabilities within the Group. However, comparative information is provided for new disclosures where applicable and

required in terms of the standards.



-  Amendments to IFRS 8 – Operating Segments (1 March 2015)

-  Amendments to IFRS 10, IFRS12 – Investment entities (1 March 2015)

-  Amendments to IFRS 13 – Fair Value Measurement (1 March 2015)

-  Amendment to IAS 24 – Related party Disclosures (1 March 2015)

-  Amendment to IAS 32 – Offsetting financial assets and financial liabilities (1 March 2015)

-  Amendment to IAS 36 – Recoverable amount disclosures for non-financial assets (1 March 2015)



Contents of provisional consolidated annual financial statements

The provisional consolidated annual financial statements have been extracted from the consolidated audited annual

financial statements, but is itself not audited. The directors take full responsibility for the preparation of the

provisional report and that the financial information has been correctly extracted from the underlying audited

annual financial statements.



Annual financial statements

The consolidated financial statements for the year have been audited by Grant Thornton Cape Inc., and their

accompanying unmodified audit report which includes an Emphasis of Matter paragraph, regarding going concern, is

available for inspection at the Company's registered office. The auditor's report does not necessarily report on all

of the information contained in this announcement/financial results. Shareholders are therefore advised that in

order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the

auditor's report together with the accompanying financial information from the issuer's registered

office.



Emphasis of Matter

'Without qualifying their opinion, the auditors would like to draw attention to Note 1, Going concern judgement, in

this SENS announcement which indicates the existence of a material uncertainty which may cast significant doubt

on the Company's and groups' ability to continue as a going concern.'



These provisional consolidated financial statements were compiled by Dylan Kohler, Professional Accountant (SA)



Approval by the Board

The provisional consolidated financial statements for the year ended 29 February 2016 (including comparatives)

were approved and authorised for issue by the board of directors on 31 May 2016



Notes to the financial statements



1. Going concern judgement



The consolidated and separate financial statements 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.



The material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going

concern are outlined below



This judgement is based on a careful consideration of the following:

Financial statements should be prepared on a going concern basis unless it is intended to liquidate the entity or to

cease trading or there is no realistic alternative but to do so.



In considering whether the going concern assumption is appropriate, all available information is taken into

account, including information about the foreseeable future.



Where there are material uncertainties relating to events or conditions which may cast doubt upon the ability to

continue as a going concern, those uncertainties should be disclosed.



The material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going

concern are outlined in the table below. The table also outlines the actions being taken to manage these uncertainties

and also the current status of these uncertainties and actions.



Significant judgements and sources of estimation uncertainty



Uncertainty                                       Action                                         Status

Timing of the amount payable to SARS              The directors have engaged with tax            The current relationship with SARS

                                                  advisors to assist them in making a            is constructive and conducive to an

                                                  submission to SARS and to negotiate a          amicable outcome. The legal advisors

                                                  settlement agreement.                          are awaiting an appointment to

                                                                                                 finalise with SARS.             



Ability of Afdawn and all of its subsidiaries     A number of actions are being taken to         a) Some of these discussions are at

to meet ongoing commitments. The risk of          mitigate the risk of this uncertainty          an advanced stage and are

this uncertainty materialising in a manner        materialising. These include: (a)              considered to have a reasonably

that could affect the relevance of the            Discussions are under way with various         high probability of resulting in

going concern assumption could arise in a         parties that could result in the sale or       transactions. refer (note 15)

period of about 5 months' time,                   other realization of various assets (or        b) There is ongoing

                                                  portions thereof). In one instance the         engagement with funders

                                                  possible transaction would also generate

                                                  additional income streams. (b) The

                                                  company has a long-enduring and very

                                                  constructive relationship with its

                                                  funders. Experience has proved that

                                                  these relationships can be relied on to

                                                  support the continued existence of the

                                                  group.



Elite has been repaying the                       Elite has made arrangement with                Elite has ongoing negotiations

Sandown loan on a monthly                         Sandown on a monthly basis when                with Sandown. These negotiations

basis, but has not fully complied                 needed.                                        centre on accommodating Elite's

with the agreed repayment                                                                        ability to repay the loan over

schedule. Sandown could                                                                          longer period.

demand repayment of the loan.                                                                    Sandown's continued support is

                                                                                                 based on the successful conclusion

                                                                                                 of the recapitalisation of Elite

                                                                                                 referred to below. Elite has

                                                                                                 repaid R4,8 million of the original 

                                                                                                 R15 million Sandown loan.

                                                                                                 

Elite needs to be recapitalized.                 A third party will acquire 51% of the           The shareholder's loan will be

                                                 economic interest in Elite by providing         converted into equity as a condition

                                                 R15 million of permanent capital, a             of the sale. A sale agreement

                                                 further R15 million loan funding facility for   has already been signed with a third

                                                 5 years and access to a client base.            party. (refer to note 15)

                                                 Afdawn will convert a portion of

                                                 its shareholders loan into equity

                                                 in Elite. This will give Elite the ability to

                                                 generate the required cash flow to fund

                                                 operations, growth and other financial

                                                 obligations.



2. Properties in possession

                                                                2016         2015

Almika Properties 81 Proprietary Limited, Benoni, Gauteng      5,312        6,749

Greenoaks - Centurion, Gauteng                                44,415       44,415

Greenoaks - PTF3 share of property                          (16,174)     (16,174)

                                                              33,553       34,990

Impairment                                                  (15,306)     (12,022)

Carrying amount                                               18,247       22,968



Reconciliation of movement 2016                               Almika    Greenoaks

Opening balance                                                6,749       44,415

Sold                                                         (1,437)            -

PTF3 share of Greenoaks                                            -     (16,174)

Impairment                                                   (3,609)     (11,697)

                                                               1,703       16,544



Reconciliation of movement 2015                               Almika    Greenoaks

Opening balance asset                                          7,029       44,415

Sold                                                           (280)            -

PTF3 share of Greenoaks                                            -     (16,174)

Impairment                                                   (3,609)      (8,413)

                                                               3,140       19,828

Almika



Almika owns a low-cost residential development consisting of 50 units in Loerie Park, Benoni, Gauteng. The development

has now been completed and the units are in the process of being sold. In terms of the agreement with the property

developer, Afdawn Group will receive R70 000 on transfer of each unit that is sold. It is estimated that this will amount

to approximately R3,4 million.



A total of 26 units have been transferred and payments of R1.8 million have been received by February 2016.



Greenoaks



Candlestick has title to a residential housing complex called Greenoaks in Centurion, Gauteng. These units are currently

being rented to tenants on annual leases (with renewal periods and rates subject to negotiation). Rental income of

R5.314 million (2015: R5.345 million) has been recognised.



Greenoaks was transferred to Candlestick in August 2010 in settlement of amounts due to African Dawn Property Transfer

Finance 2 Proprietary Limited ("PTF 2") and Africa Dawn Property Transfer Finance 3 Proprietary Limited ("PTF 3") by Blue

Dot Properties 1198 CC (”Blue Dot”). PTF 3 is not part of the Afdawn Group.



In terms of an agreement between PTF 2 and PTF 3, any amount realised on disposal of the property less amounts payable

to Nedbank (under the first mortgage bond) less related costs less amounts due to certain other third parties will be

shared between PTF 2 and PTF 3 on a 50:50 basis in settlement of the balance of their respective loans to Blue Dot.



For this reason, the reconciliation above is split as follows:



a. Amount relating to legal title of entire property

b. Less PTF3 share of the property (50%)

c. Equals amount relating to Afdawn Group's share of the property (i.e. the 50% referred to above that is

   in substance Afdawn Group's share of the property).



Blue Dot has since been placed in liquidation and there was a dispute in terms of which the liquidator was attempting to have

the property transferred back into the insolvent estate of Blue Dot. Negotiations between the Blue Dot liquidator and

Candlestick have concluded and a settlement has been reached whereby on the sale of the building the Nedbank bond

and selling costs will be settled first and the balance will be split in the following ratio PTF2 35%, PTF3 35% and Blue Dot

liquidator 30%.



The other claims against the property include:



d. A Nedbank loan, in terms of which Nedbank registered a first bond against the property. The original facility

   was R14.100 million and the amount outstanding at the reporting date was R7.564 million (2015: R8.868 million) (refer

   to note 15).

        

e. On 8 April 2016 Candlestick has entered into a sale of rental enterprise agreement (”Green Oaks Transaction”)

   with SJJM Property for a consideration for R32,500 million. Based on the settlement agreement signed on 23

   December 2015 Afdawn expects to receive proceeds of R8,700 million on transfer date. Afdawn shareholders

   still need to approve the Green Oaks transaction at a general meeting. (refer to note 15)



3. Trade and other receivables

                                                                          2016        2015



Trade receivables                                                       53,865     101,924  

Impairment allowance                                                  (18,934)    (66,489) 

Deposits                                                                   293         276   

VAT                                                                        145         373   

Other receivables                                                          612       3,750       

                                                                        35,981      39,835   



Certain trade receivables are used as security on related borrowings from the National Housing Finance Corporation

("NHFCE"). Refer to note 6.

 

4. Current tax receivable/(payable)

                                                                          2016        2015



Current tax receivable                                                       -           -       

Current tax payable                                                   (15,054)    (14,840)   

                                                                      (15,054)    (14,840)   



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 with a view to reaching a

settlement on this.



A liability has been recognised in full for all interest and penalties that are payable to SARS.



Change in estimate – interest and penalties on income tax and VAT liability



As disclosed in the prior year financial statements an estimate was made of the current tax and VAT liabilities relating to

Afdawn, Elite and Bhenka, plus the related interest and penalties that would be due to SARS. However, as a result of the

section 200 application to SARS being declined in May 2015 additional interest and penalties of R0,938 million (2015:

R2,710 million) were due.



5. Share capital and share premium

                                                                              2016             2015

Authorised

5,000,000,000 Ordinary shares of 1c each                                50,000,000       50,000,000



The total shares in issue as at 29 February 2016 amounted to 877,002,273 (2015: 880,270,597).



Reconciliation of number of shares in issue

Reported as at 01 March net of treasury shares                             880,270          508,184

Treasury shares cancelled                                                  (3,268)

Issue of ordinary shares in rights offer                                         -          272,086

Issue of shares to Knife Capital Vendors                                         -          100,000

                                                                           877,002          880,270

Reconciliation of share values 'R000:

Reported at beginning of period                                            313,943          284,634

Issue of ordinary shares in rights offer                                         -           21,767

Issue of shares to Knife Capital Vendors                                                      9,000

Capitalisation of share issue costs                                              -          (1,458)

                                                                           313,943          313,943



                                                                              2016             2015

                                                                             R'000            R'000



Share premium                                                              305,140          317,972

Treasury shares                                                                  -         (12,832)

Total share premium                                                        305,140          305,140

Ordinary shares                                                              8,803            8,803

                                                                           313,943          313,943



As part of the capital raising completed on 31 October 2011, two convertible bonds were issued which were convertible

into ordinary share capital at the option of the holders after 3 years from the commencement date. The conversion

option of the bond holders became due during the 2015 financial year and the bond holders decided not to convert the

bonds into shares.



During March 2014 a 1 for 1 rights offer of 222,086,442 shares were taken up at 8c per share, with a further 50,000,000

shares being issued to the underwriter of the share issue. At around the same time as the rights issue took place

100,000,000 shares at 9c per share were issued to the vendors of Knife Capital to purchase 100% of the share capital.



On 1 December 2014, the board resolved to apply to the JSE Limited for the treasury shares to be de-listed. These

shares were de-listed on 9 March 2015

                                                                             2016              2015    

Share issue                                                                     -            21,767 

Share issue costs                                                               -           (1,458) 

                                                                                -            20,309

6. Borrowings

GROUP 2016 R'000                                                   Loan Balance      Present       Deemed     Balance

                                                                                       Value     interest

                                                                                  Adjustment

National Housing Finance Corporation ("NHFC") -                           2,576            -            -       2,576

Elite entered into a separate facility agreement whereby the

loan is secured on the associated debtors, bears interest at

prime +5% and is repayable over 5 years from the borrowing

date. Afdawn has provided a guarantee on the loan facility.



Sandown Capital Elite Two loan - The loan is                               580             -            -         580

unsecured, bears interest at prime and is repayable in

instalments of per month plus accrued interest.

 Up to R80,000



Sandown Capital loan - The convertible bond was not                      6,300             -            -       6,300

converted and new terms are as follows: interest is charged

at prime, currently 9.25% per annum and repayments of

up to R700,000 plus interest per month in the short term. The

loan is unsecured.



Sandown Capital Interest free portion loan - The loan                    3,333             -            -       3,333

bears interest at prime current 10.5% and is repayable in

instalments of starting in December 2016. The loan is unsecured.

up to R700,000



Nedbank mortgage bond - The loan is secured on fixed                     7,564             -            -       7,564

property. Interest is levied at prime -0.5% and the loan is

repayable in instalments of R172,932 per month. The bond

arose as part of a property in possession transaction. The

monthly instalments are funded through the cash generated

through operations at Greenoaks.

                                                                        20,353             -            -      20,353





GROUP 2015 R'000                                                  Loan Balance       Present       Deemed     Balance

                                                                                       Value     interest

                                                                                  Adjustment



National Housing Finance Corporation ("NHFC") Loan                       1,750          (92)            -       1,658

Guarantee - The loan is unsecured, interest free and is

to be repaid by 30 September 2015.



National Housing Finance Corporation ("NHFC") -                          3,796             -            -       3,796

Elite entered into a separate facility agreement whereby the

loan is secured on the associated debtors, bears interest at

prime +5% and is repayable over 5 years from the borrowing

date. Afdawn has provided a guarantee on the loan facility.



Sandown Capital Elite Two loan - The loan is                             1,750          (76)           44       1,717

unsecured, interest free and is repayable in instalments of

Up to R150,000 per month.



Nexus liquidator - The loan arose when Nexus went into                   2,535             -            -       2,535

liquidation and the balance owed by Elite who was

contracted to collect on the debtors book. The loan is

unsecured, interest free and payment terms are being

negotiated with the liquidator.



Sandown Capital loan - The convertible bond was not                      9,600             -            -       9,600

converted and new terms are as follows: interest is charged

at prime, currently 9.25% per annum and repayments of

up to R700,000 plus interest per month in the short term. The

loan is unsecured.



Sandown Capital Interest free portion loan) - The loan                   3,333         (494)           66       2,905

does not bear interest and is repayable in instalments of

up to R700,000 starting in June 2016. The loan is unsecured.



Nedbank mortgage bond - The loan is secured on fixed                     8,869             -            -       8,869

property. Interest is levied at prime -0.5% and the loan is

repayable in instalments of R169,450 per month. The bond

arose as part of a property in possession transaction. The

monthly instalments are funded through the cash generated

through operations at Greenoaks.

                                                                        31,633         (662)          110      31,080



                                                                                          2016       2015

Non-current liabilities                                                                   

At amortised cost                                                                       12,524     13,758

Present value and interest adjustments                                                       -      (460)

                                                                                        12,524     13,298

Current liabilities                                  

At amortised cost                                                                        7,829     17,874 

Present value and interest adjustments                                                       -       (92)

                                                                                         7,829     17,782

                                                                                        20,353     31,080

                                                                                        

                                                                                          2016       2015

7. Loans from directors



EA Van Heerden                                                                             162      1,770

JK Van Zyl                                                                                 162      1,771

A Bohmert                                                                                  163      1,771

                                                                                           487      5,312



The loans arose as part of the Knife Capital Group acquisition transaction detailed in the circular issued on 7 March 2014.



Reconciliation                                                                            2016       2015

First NAV liability                                                                      1,217      1,460

(interest free payable at R60 833 per month with effect from November 2014)                             -

Repayments                                                                               (730)      (243)

Subtotal (A)                                                                               487      1,217

Second NAV liability (interest free and payable in June 2015)                            2,095      2,095

Reversed per agreement reached with shareholders *                                     (2,095)          -

Share issue liability (to be settled immediately in a variable number of shares)         2,000      2,000

Reversed per agreement reached with shareholders *                                     (2,000)          -

                                                                                           487      5,312 



*On 1 July 2015 as announced on SENS, the vendors of Knife Capital have released Afdawn from the second NAV liability

and the share issue liability. The outstanding balance of loans from directors on acquisition of Knife Capital is R0. 486 million

(2015: R1 216 million ).



Non-current liabilities                                                                      -    (1,535)

Current liabilities                                                                      (487)    (3,777)

                                                                                         (487)    (5,312)



                                                                                          2016       2015

8. Trade and other payables



Trade payables                                                                             473      1,343

VAT                                                                                      5,938      7,709

Accrued leave pay                                                                        1,055      1,020

Accrued expenses                                                                         4,165      1,124

Accrued audit fees                                                                         450        180

Deposits received                                                                          388        353

                                                                                        12,469     11,729



R 5,781 million (2015: R7,709 million) of the VAT liability is also the subset of the submission to SARS



9. Revenue

                                                                                          2016       2015



Rendering of services                                                                    7,303      8,740

Non-interest income (administration fees)                                                  798      1,718 

Rental income                                                                            5,315      5,346



Interest received                                                                       23,878     23,398

Insurance revenue                                                                           35        947

                                                                                        37,329     40,149



                                                                                          2016       2015

10. Other income



Profit on disposal of subsidiary                                                             -      3,231

Gain on present value adjustment of interest free                                            -        662

borrowings                                                     

Bad debts recovered on trade receivables                                                   738      1,850

Sundry income                                                                            1,077        232

VAT recovery                                                                                 -         77

Fair value adjustment                                                                    2,095         49

Penalty received on subsidiary sale cancellation                                             -      1,316

                                                                                         3,910      7,417

11. Operating loss

                                                                                          2016       2015

Operating loss for the year is stated after accounting for the following:

Operating lease charges

- Premises                                                                               2,608      3,828         

- Equipment                                                                                498        566        

                                                                                         3,106      4,394         



Loss on sale of property, plant and equipment                                               13         23

Profit on disposal of subsidiary                                                             -      3,231

Impairment to properties in possession                                                   3,284      1,500

Legal fees                                                                               1,686        935

Loss on call up of NHFC guarantee still due (refer to                                        -      1,750

note 6)

Loss on call up of NHFC guarantee paid during year                                           -      2,000

(refer to note 6)                                    

Impairment on intangible assets                                                              -      1,150



Amortisation on intangible assets                                                        1,671      1,758     



Depreciation on property, plant and equipment                                              394        424  

Employee costs                                                                          16,968     20,534

                                                                 

12. Finance costs                                                                         2016       2015



NHFC interest                                                                              415        491

Interest on convertible bond                                                                 -      1,251

Interest paid RHLF                                                                           -         44

Finance leases                                                                              15         22

Bank                                                                                        34         28

Sandown Capital borrowing                                                                  880        196

STRB convertible bond interest                                                               -        265

Penalties and interest on income tax                                                       938      5,518

Nedbank bond interest                                                                      736        818

                                                                                         3,018      8,633



13. Auditors' remuneration                                                                2016       2015



Fees                                                                                     1,721        861

Tax and secretarial services                                                                 -         36

                                                                                         1,721        897                         

14. Cash used in operations



Loss before taxation                                                                   (6,944)   (31,977)

Adjustments for:

Depreciation                                                                               394        424

Loss on disposal of property, plant and equipment                                         (13)         23

Movement in operating lease liabilities                                                      5      (151)

Gain on present value adjustments on interest free                                           -      (661)

borrowings

Equity accounted income Elite Two                                                            -      2,259

Investment income                                                                        (346)      (735)

Finance costs                                                                            2,080      3,115

Fair value of contingent consideration                                                 (4,095)      2,000

Non-cash finance costs (penalties and interest on income tax)                              938      5,518

Amortisation                                                                             1,670      1,758

Deemed interest expense                                                                    552        110

Profit on disposal of Nexus                                                                  -    (3,231)

Impairment of properties in possession (refer to note 2 )                                3,283      1,500

Non-cash portion of NHFC guarantee                                                           -      1,750

Impairment of intangible asset                                                               -      1,150

Changes in working capital:

Properties in possession                                                                 1,439        280

Trade and other receivables                                                              3,853     14,798

Trade and other payables                                                                   736    (1,514)

Deferred income                                                                          (474)        474

Other financial assets                                                                     412        830

                                                                                         3,490    (2,280)

15. Events after the reporting period



Non-adjusting events



Elite Transaction



On 4 December 2015, Afdawn and Dzothe Investments have entered into an agreement whereby Afdawn will convert a portion

of its shareholder loan into equity of Elite and Dzothe Investments will acquire 51% of the economic interest of Elite and

recapitalize Elite. This will give Elite the ability to generate the required cash flow to fund operations, growth and other

financial obligations. Afdawn shareholders still need to approve the Elite transaction at a general meeting.  



Disposal of Rental Enterprise by Candlestick



On 8 April 2016 Candlestick has entered into a sale of rental enterprise agreement (”Green Oaks Transaction”) with SJJM

Property for a consideration for R32,500 million. Based on the settlement agreement signed on 23 December 2015 Afdawn

expects to receive proceeds of R8,700 million on transfer date. Afdawn shareholders still need to approve the Green Oaks

transaction at a general meeting.



16. Segment report



The segment information has been prepared in accordance with IFRS 8 - Operating Segments which defines the

requirements for the disclosure of financial information of an entity's operating segments. IFRS 8 requires segmentation

based on the group's internal organisation and reporting of revenue and operating income based upon internal accounting

methods.



The group discloses its operating segments according to the components regularly reviewed by the chief operating

decision-makers, being the executive directors. These amounts have been reconciled to the consolidated financial

statements. The measures reported by the group are in accordance with the accounting policies adopted for preparing

and presenting the consolidated financial statements. Segment revenue excludes value added taxation and includes inter-

segment revenue which is R2,642 million (2015: nil). Net revenue represents segment revenue from which intersegment

revenue has been eliminated. Sales between segments are made on a commercial basis. Segment operating profit before

capital items represents segment revenue less segment expenses. Segment expenses consist of operating expenses.

Depreciation, amortisation and impairments have been allocated to the segments to which they relate.



The segment assets comprise all assets of the different segments that are employed by the segment and that are either

directly attributable to the segment, or can be allocated to the segment on a reasonable basis.



The group's reportable segments are based on the following lines of business:

a.   Investment advisory and investment management

This segment consists of the Knife Capital Group which provides investment advisory and investment management

services to entrepreneurial and innovative companies.

b.   Micro finance

This segment consists of Elite and Elite Two. These companies are involved in micro finance in the unsecured lending

industry and have a wide base of customers (mostly individuals).

c.   Rentals of properties in possession

This segment consists of a residential complex with 76 units (a mix of 2 and 3 bedrooms), that are rented out on annual

leases to individuals.

d.   Other



Other consists of the holding company together with other smaller entities not dealt with in other segments.

Segment information has been restated to comply with the segments identified above.

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.



2016                                                            Investment

                                                              advisory and                Rentals of

                                                                investment     Micro   properties in

                                                                management   finance      possession      Other      Total

                                                                     R'000     R'000           R'000      R'000      R'000

Revenue external                                                     8,641    24,348           5,315      (975)     37,329

Cost of sales                                                          984                                (145)        839

Other income                                                           (8)       922               6      2,990      3,910

Investment income                                                       81         1               2        262        346

Finance costs                                                            -     2,031             736        251      3,018

Operating expenses                                                   8,166    22,342           6,596      5,732     42,836

Impairment trade and other receivables (refer to          

note 11)                                                                 -     1,317             589          -      1,906

Bad debts actually written off                                           -     2,168             293     44,145     46,606

Fair value adjustments                                                   -         -               -          -          -

Deemed interest expense                                                  -       460               -         92        552

Impairment of property in possession                                     -         -           3,284          -      3,284

Depreciation and amortisation                                          39        648               2      1,376      2,065

Profit/(loss) before taxation                                        (435)     1,617         (2,010)    (6,116)    (6,944)

Taxation                                                             (102)      (62)             499      (369)       (34)

Other comprehensive income                                               -         -               -          -          -

Total comprehensive                                                  (333)     1,679         (2,509)    (5,747)    (6,910)

Segment total assets                                                 3,340    28,480          17,512     22,704     72,036

Segment total liabilities                                            1,434    40,911          21,306   (14,116)     49,535

Intangible assets acquired                                             299        47               -          -        346

Goodwill                                                                 -         -               -      8,076      8,076

Property, plant and equipment acquired                                  55       505              10          -        570



2015                                                      Investment

                                                        advisory and                      Rentals of

                                                          investment                   properties in      Other      Total

                                                          management   Micro finance      possession

                                                               R'000           R'000           R'000      R'000      R'000

Revenue external                                               8,891          25,241           5,346        671     40,149

Revenue internal                                                   -               -               -          -          -

Cost of sales                                                    268               -               -          -        268

Other income                                                       -           2,406              77      4,934      7,417

Investment income                                                 30               1               2        702        735

Finance costs                                                      2           2,590             818      5,223      8,633

Operating expenses                                             5,836          42,249           2,848     14,575     65,508

Impairment trade and other receivables          

(refer to note 11)                                                 -          11,400             370      1,229     12,999

Bad debts actually written off                                     -          14,007             157     42,547     56,711

Fair value adjustments                                             -               -               -      2,000      2,000

Deemed interest expense                                            -             145               -       (35)        110

Equity accounted loss                                              -           2,259               -          -      2,259

Loss on sale of non-current assets                                 -              11               -         70         81

Loss on call up of NHFC guarantee (refer to          

note 15)                                                           -               -               -      3,750      3,750

Depreciation and amortisation                                     33             875               -      1,274      2,182

Impairment of intangible assets                                    -           1,150               -          -      1,150

Profit/(loss) before taxation                                  2,804        (19,595)             259   (15,445)   (31,977)

Taxation                                                         781               -             498      (244)      1,035

Other comprehensive income                                         -               -               -          -          -

Total comprehensive                                            2,023        (19,595)           (239)   (15,201)   (33,012)

Segment total assets                                           4,617          32,173          20,886     36,740     94,416

Segment total liabilities                                      2,377          46,557          22,171    (6,100)     65,005

Intangible assets acquired                                         -               -               -      6,543      6,543

Goodwill                                                           -               -               -      8,076      8,076

Property, plant and equipment acquired                            81              44               1        220        346



17. Loss per share and headline loss per share



Basic and diluted loss per share



Basic loss per share and diluted loss per share are calculated by dividing the loss attributable to equity holders of the

company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares held as

treasury shares ( refer to note 5).

                                                                                                    2016              2015

Basic and diluted loss per share         

From continuing operations (c per share)                                                          (0.79)            (3.84)

                                                                                                  (0.79)            (3.84)

Reconciliation of loss for the year to basic and diluted loss         

Loss from continuing operations         

                                                                                                 (6,910)          (33,012)

                                                                                                 (6,910)          (33,012)



Reconciliation of weighted average number of ordinary shares used for basic and diluted loss per share and headline and diluted

headline loss per share

Number of ordinary shares in issue                                                               877,002           508,184

Adjusted for:         

Rights issue                                                                                                       259 110

Shares issued Knife Capital Group acquisition 28 March 2014                                            -            92,603

Weighted average number of shares used for loss and headline loss per share         

                                                                                                 877,002           859,897

         

Headline loss and diluted headline loss per share                 

Headline loss per share continued (c)                                                             (0.79)            (4.08)   

                                                                                                  (0.79)            (4.08)   

         

                                                                                                    2016

                                                                                                   Gross               Net

Loss from operations                                                                                               (6,910)

Profit on disposal of property, plant and equipment                                                 (13)               (9)

Headline loss from operations                                                                                      (6,919)

         

                                                                                                    2015

                                                                                                   Gross               Net

Loss from continuing operations                                                                                   (33,012)

Loss on disposal of property, plant and equipment                                                     23                17

Impairment of intangible asset                                                                     1,150             1,150

Profit on disposal of subsidiary                                                                 (3,231)           (3,231)

                                                                                                                  (35,076)

18. Change in directors



Directors           Office                    Designation        Changes

WJ Groenewald       Chief Executive Officer   Executive

                    (CEO) and acting

                    Chairperson

EA Van Heerden                                Executive          Resigned 11 January 2016 #

A Bohmert                                     Executive          Resigned 11 January 2016 #

JK Van Zyl                                    Executive          Resigned 11 January 2016 #

V Lessing                                     Independent non-

                                              executive

HH Hickey           Chair audit committee     Independent non-

                                              executive

SM Roper                                      Independent non-

                                              executive

Graham Hope         Chief Financial Officer   Executive          Appointed 11 January

                    (CFO)                                        2016



# These directors resigned from the board of the Company , but are still employed as executives in the Group



Administration



Registered office                             Company secretary

202 Waterfront Terraces                       A Rich (on behalf of Statucor Proprietary Limited)

Waterfront Road       

Tygervalley Waterfront                        Auditors

7530                                          Grant Thornton                                 

Tel: +27(12)9145566 

                                              Designated Advisor

                                              PSG Capital

                                            

Transfer secretaries

Computershare Investor Services Proprietary Limted 70 Marshall Street, Johannesburg, 2001



Date   31 May 2016

www.afdawn.co.za
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