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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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