Wrap Text
Unaudited Consolidated Statements For The Six Months Ended 31 August 2017
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"
UNAUDITED CONSOLIDATED STATEMENTS FOR THE SIX MONTHS ENDED 31 AUGUST 2017
Consolidated Statements of Financial Position as at 31 August 2017
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
(Unaudited) (Unaudited) (Audited)
Assets
Non-Current Assets
Property, plant and equipment 524 791 605
Goodwill 3 855 8 076 4 679
Intangible assets 2 516 4 352 3 775
Deferred tax 700 335 697
7 595 13 554 9 756
Current Assets
Properties in possession - 17 695 15 853
Trade and other receivables 26 723 32 022 31 193
Cash and cash equivalents 920 1 916 1 983
27 643 51 633 49 029
Total Assets 35 238 65 187 58 785
Equity and Liabilities
Equity
Share capital and share premium 313 943 313 943 313 943
Accumulated loss (307 768) (298 433) (303 630)
Non-controlling interest 20 - -
6 195 15 510 10 313
Liabilities
Non-Current Liabilities
Deferred tax 371 943 758
Borrowings 5 131 838 6 316
5 502 1 781 7 074
Current Liabilities
Current tax payable 16 291 15 902 16 280
Borrowings 4 207 16 002 9 475
Loans from directors - 628 1 523
Operating lease liability - - 5
Trade and other payables 3 043 15 364 14 115
23 541 47 896 41 398
Total Liabilities 29 043 49 677 48 472
Total Equity and Liabilities 35 238 65 187 58 785
Consolidated statement of Profit or Loss and other comprehensive Income for the six months ended 31 August 2017
28 February
31 August 2017 31 August 2016 2017
R'000 R'000 R'000
(Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 14 287 16 011 36 991
Cost of sales (53) (287) (366)
Gross profit 14 234 15 724 36 625
Other income 35 313 1 387
Operating expenses (15 861) (21 298) (44 880)
Operating loss (1 592) (5 261) (6 868)
Investment income 4 12 84
Impairment of goodwill (485) - (3 397)
Deemed interest expense - - (585)
Impairment to properties in possession - - (971)
Impairment to intangible assets (1 596) - -
Reduction in liability to Nexus liquidator - - 2 162
Finance costs (826) (1 794) (3 245)
Loss before taxation (4 495) (7 043) (12 820)
Taxation 377 52 632
Loss for the year (4 118) (6 991) (12 188)
Loss attributable to:
Owners of the parent (4 138) (6 991) (12 188)
Non-controlling interest 20 - -
(4 118) (6 991) (12 188)
Basic loss per share (c) (16.3)^ (31.9)^ (55.6)^
Headline loss per share (c) (16.3)^ (31.9)^ (40.1)^
^ Based on a restated loss and headline loss per share considering the share consolidation which occurred on a 40 to 1 basis,
implemented on Monday, 5 December 2016.
Consolidated Statements of Changes in Equity for the six months ended 31 August 2017
Share Share Retained Ordinary Non Total
Capital Premium Earnings Shareholders controlling Equity
Equity interest
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 28 February 2016 8 803 305 140 (291 442) 22 501 22 501
Total comprehensive loss for the six months 31 Aug 2016 - - (6 991) (6 991) (6 991)
Balance at 31 August 2016 8 803 305 140 (298 433) 15 510 15 510
Total comprehensive (loss) for the six months Sep to Feb 2017 - - (5 197) (5 197) (5 197)
Balance at 28 February 2017 8 803 305 140 (303 630) 10 313 10 313
Total comprehensive loss for the six months 31 Aug 2017 - - (4 138) (4 138) 20 (4 118)
Balance at 31 August 2017 8 803 305 140 (307 768) 6 175 20 6 195
Consolidated Statements of Cash Flows for the six months ended 31 August 2017
Six months Six months
year ended year ended Year ended
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
Note (Unaudited) (Unaudited) (Audited)
Cash flows from operating activities
Cash generated from operations 11 7 742 3 368 4 836
Interest income 4 12 84
Finance costs (826) (1 794) (2 403)
Tax paid - 764 322
Net cash from operating activities 6 920 2 350 2 839
Cash flows from investing activities
Purchase of property, plant and equipment (7) (19) (44)
Proceeds on disposal of property, plant and equipment - - 31
Purchase of intangible assets - (29) (303)
Net cash from investing activities (7) (48) (316)
Cash flows from financing activities
Borrowings repaid (6 453) (3 513) (4 562)
Finance lease payments - (19) (19)
Repayment of directors' loans (1 523) 141 1 036
Net cash from financing activities (7 976) (3 391) (3 545)
Total cash movement for the year (1 063) (1 089) (1 022)
Cash at the beginning of the year 1 983 3 005 3 005
Total cash at end of the year 920 1 916 1 983
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Reporting entity
Afdawn is domiciled in the Republic of South Africa. The unaudited consolidated interim financial statements for the six months
ended 31 August 2017 comprise the results of the Company and its subsidiaries ("the Group") and the Group's interests in associates.
2. Basis of preparation
The consolidated interim financial statements have been prepared using the historical cost convention, as modified for certain items
measured at fair value.
The consolidated interim financial statements have been prepared in accordance with:
- International Financial Reporting Standards (IFRS);
- IAS 34 - Interim Financial Reporting;
- The requirements of the South African Companies Act (Act No 71 of 2008), as amended;
- The JSE Listings Requirements;
- The SAICA Financial Reporting Guides as issued by the Accounting Practices Committee; and
- The Financial Pronouncements as issued by Financial Reporting Standards Council.
These consolidated interim financial statements have not been audited or reviewed by the company's auditors.
These consolidated interim financial statements should be read in conjunction with the annual financial statements for the year
ended 28 February 2017.
3. Approval
The consolidated interim financial statements were prepared by Dylan Kohler Professional Accountant (SA) and supervised by the
chief financial officer, G Hope CA (SA). They were approved by the Board on 22 November 2017.
4. Significant accounting policies
The accounting policies adopted in the preparation of the consolidated interim financial information are consistent with those
applied in the consolidated annual financial statements for the year ended 28 February 2017. For a full list of standards and
interpretations, which have and have not been adopted, refer to the 28 February 2017 consolidated annual financial statements.
5. Significant judgements and accounting estimates
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ
from these estimates.
Except as described below, in preparing these consolidated financial statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of estimation certainty were the same as those that applied in the
consolidated financial statements for the year ended 28 February 2017 (refer to note 1.18 of the consolidated annual financial
statements for the year ended 28 February 2017).
6. Significant transactions
The Elite Transaction was cancelled in May 2017 as Dzothe Investments was unable to remedy the breach to pay the R10m instalment
as part of the Purchase Consideration. This had a significant effect on our ability to settle the SARS debt.
The proceeds of the Green Oaks Transaction was received in May 2017 and was used to settle various obligations of the Group.
An internal restructuring took place in the Group prior to the implementation of the Knife Disposal (refer to note 8):
- Knife Capital transfered its entire shareholding and claims in YueDiligence Proprietary Limited to Afdawn - this amounts to an
internal restructuring prior to the implementation of the Knife Disposal;
- Knife Capital transfered 50% of the entire shareholding in Grindstone Accelerator Proprietary Limited ("Grindstone") to
Afdawn - this amounts to an internal restructuring prior to the implementation of the Knife Disposal; and
- Knife Capital assigned all of its rights, title and interests in certain intellectual property ("IP") to Grindstone.
7. Business combinations
A new subsidiary was acquired in the six-month period to 31 August 2017 to assist with growth in the envisioned SME platform.
Additionally agreements were entered into on 1 September 2017 as detailed in note 6 to restructure the group.
Acquisition of SME Snapshot (Pty) Ltd R'000
Consideration at historical cost (The acquisition is being paid for with 18 new shares of R1 in an existing
subsidiary) -
Assets acquired - Intellectual property 340
Liabilities acquired - Loan account to owner transferred to Afdawn included in transaction -
Identifiable liabilities
Negative Goodwill on acquisition (340)
There was no cash received or paid.
8. Events after the reporting period
Shareholders were advised on 24 August 2017 that Afdawn has entered into an agreement with Evitavonni International SA
("Purchaser")("Agreement"), in terms of which Afdawn will dispose of 100% of the issued share capital ("Sale Shares") of Knife
Capital Proprietary Limited ("Knife Capital").
The restructured Knife Disposal will become effective on 1 September 2017 ("Effective Date").
The total purchase consideration payable by the Purchaser for the Sale Shares is an amount of R3 625 000, was payable in cash on
the Effective Date.
9. Impairment of trade and other receivables
The carrying amount of trade and other receivables was assessed for impairment at the interim dates and resulted in the
following changes:
Impairment 31 Aug 2017 31 Aug 2016 28 Feb 2017
R'000 R'000 R'000
Movement in impairment provision trade and other receivables (195) 1 541 1 668
10. Segment report
The Group's reportable segments are unchanged from those disclosed in the consolidated annual financial statements for the
year ended 28 February 2017. The segment report for the six-month period to 31 August 2017 included for comparative purposes.
All the segments operate only in South Africa, largely in the Gauteng and Western Cape provinces therefore no geographical
information is provided. Similarly, all non-current assets are in South Africa.
31 Aug 2017
Investment Rentals of
advisory and properties
investment in
management Micro finance possession Other Total
R'000 R'000 R'000 R'000 R'000
Revenue 2 210 9 643 1 176 1 258 14 287
Cost of sales 48 5 - - 53
Other income - 57 (22) - 35
Investment income 2 - 2 - 4
Finance costs - 594 169 63 826
Operating expenses 1 806 9 259 1 548 3 248 15 861
Goodwill and Intangibles 1 904 177 - - 2 081
Impairment trade receivables - (3 195) 3 000 (195)
Bad debts written off - 4 505 461 - 4 966
Loss before taxation (1 546) (335) (561) (2 053) (4 495)
Taxation - 4 (10) 383 377
Total comprehensive loss (1 546) (331) (571) (1 670) (4 118)
Total assets 6 481 22 969 194 5 594 35 238
Total liabilities 250 10 792 432 17 569 29 043
Intangible assets 1 927 589 - - 2 516
Goodwill 3 855 - - - 3 855
Property, plant and equipment 44 428 4 48 524
31 Aug 2016 Investment Rentals of
advisory and properties
investment in
management Micro finance possession Other Total
R'000 R'000 R'000 R'000 R'000
Revenue 2 362 11 619 2 449 (419) 16 011
Cost of sales 287 - - - 287
Other income 35 278 - - 313
Investment income 10 - 1 1 12
Finance costs - 833 365 596 1 794
Operating expenses 3 293 11 972 1 617 4 416 21 298
Impairment trade receivables - 1 766 (225) - 1 541
Bad debts written off - 1 230 88 - 1 318
Profit/(loss) before taxation (1 173) (908) 468 (5 430) (7 043)
Taxation - - (131) 183 52
Total comprehensive profit/(loss) (1 173) (908) 337 (5 247) (6 991)
Total assets 1 960 24 632 17 911 20 684 65 187
Total liabilities 1 226 37 759 21 369 (10 677) 49 677
Intangible assets 3 685 667 - - 4 352
Goodwill 8 076 - - - 8 076
Property, plant and equipment 83 599 7 102 791
11. Cash generated from operations
31 Aug 2017 31 Aug 2016 28 Feb 2017
R'000 R'000 R'000
Loss before taxation (4 495) (7 043) (12 820)
Adjustments for:
Depreciation 88 107 282
Loss on disposal of property, plant and equipment - - 5
Movement in operating lease liability (5) (28) -
Investment income (4) (12) (84)
Finance costs 826 1 794 2 403
Reduction in liability to Nexus liquidators - - (2 162)
Operating lease movement - - (23)
Non-cash finance costs (penalties and interest on income tax) 11 - 842
Amortisation intangible assets 1 596 832 1 683
Non-cash effect of equity accounted investment (20) - -
Deemed interest expense - - 585
Impairment of properties in possession - - 971
Impairment of goodwill 485 - 3 397
Changes in working capital:
Properties in possession 15 853 552 1 422
Trade and other receivables 4 470 3 959 4 204
Trade and other payables (11 063) 2 895 3 819
Other financial assets - 312 312
7 742 3 368 4 836
12. Related parties
Related party relationships - other than as disclosed below, there have been no significant changes from the disclosures in the
consolidated annual financial statements for the year ended 28 February 2017.
Executive and non-executive directors As per directors' report in the consolidated annual financial statements
for the year ended 28 February 2017.
Other key management DD Breedt
Significant shareholder with borrowings Sandown Capital Proprietary Limited
31 August 2017 31 August 2016
R'000 R'000
Related party transactions
Interest paid to directors
WJ Groenewald 7 19
G Hope 56 31
Related party balances
Balance of directors loans relating to acquisition of Knife Capital
EA van Heerden - 41
JK van Zyl - 41
A Bohmert - 41
Balances of directors loans relating to short term cash advances @ 2% interest per month
WJ Groenewald - 18
G Hope - 487
Loan accounts - Owing to related parties
Elite owes Sandown Capital Proprietary Limited (6 631) (7 928)
13. Earnings / (loss) per share
Basic and diluted earnings / (loss) per share
Basic and diluted earnings / (loss) per share are calculated by dividing the profit / (loss) attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue during the period (excluding ordinary shares held as
treasury shares).
31 August 2017 31 August 2016
Basic loss per share
Loss per share (c) (18.9) (31.9)^
Reconciliation of weighted average number of ordinary shares '000 '000
Number of ordinary shares in issue 877 002 880 271
Adjusted for:
Treasury shares cancelled - (3 269)
Share consolidation @ 1 share per 40 held (855 077) (855 077)
Weighted average number of shares used for loss and headline
loss per share^^ 21 925 21 925
Headline loss per share
Headline loss per share (c) (18.9) (31.9)^
Headline earnings / reconciliation
Loss for the period (4 138) (6 991)
Headline loss for the period (4 138) (6 991)
^ Restated loss and headline loss per share considering the share consolidation which occurred on a 40 to 1 basis, implemented on
Monday, 5 December 2016.
^^ No shares in issue with a dilutionary impact, therefore no dilution impact on loss and headline loss per share.
14. Comments from The Board
REVIEW FOR THE PERIOD
The failure of the Elite Transaction in May 2017 had a major effect on the Group in various ways. The proceeds of the Elite disposal
would have enabled Afdawn to make a settlement proposal to SARS and be able to pay this obligation without raising any further funds.
A further negative effect on the strategy of making Afdawn a listed venture capital company and proceed with Knife Capital as the only
operational assets.
Knife Capital was restructured and the fund management business was sold after reporting period. Yuediligence appointed a new CEO and
SME Snapshot was acquired to establish an investment analytics platform.
Elite was negatively affected by lack of funding to grow advances. This was offset by a further reduction of operating expenses and
a shortening of the duration of the debtors' book. Access to further funding is a key priority to Elite.
Head office costs were further reduced by the closure of head office in Durbanville and the key management waived a portion of their
entitled salaries to the end of August 2017.
The successful conclusion of a settlement agreement with SARS is critical for the future of the Group. The Group will be unable to
tap capital markets until this have been achieved.
DIRECTORATE
The directors in office at the date of this report are:
Director Office Designation
WJ Groenewald Chief Executive Officer (CEO) and acting Chairman Executive
HH Hickey Chair audit Committee Independent Non-Executive
GB Hope Chief Financial Officer (CFO) Executive
V Lessing Independent Non-Executive
SM Roper Independent Non-Executive
GOING CONCERN
These results have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that
funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
Certain material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going
concern were outlined in note 1.18. of the Annual Financial Statements for the year ended 28 February 2017. The following
actions were implemented to reduce these uncertainties:
- Concluding a successful SARS compromise is critical (please refer to SARS note below).
- Ability of Afdawn and all of its subsidiaries to meet ongoing commitments by reducing operating cost.
- Sandown agreed to lengthen the term of the Elite loan to April 2019 after the failure of the Elite transaction.
- The group also significantly reduced liabilities during the period.
SOUTH AFRICAN REVENUE SERVICES ("SARS")
A new Section 200 application was submitted in December 2016 which was changed after the failure of the Elite transaction.
A further revised application is still being considered by SARS. This is still the biggest risk in the group as both the
going concern and any future investment and/or capital raising can only be undertaken, once we have received a final outcome from SARS.
A liability has been recognised in full for all interest and penalties that are payable to SARS as per updated SARS statements.
The liability originated in the years 2007 to 2010.
DIVIDENDS
No dividends have been declared for this interim period (August 2016: R0).
PROSPECTS
The Group will focus to growth the underlying operational assets of Elite, Yuediligence and Grindstone. A successful SARS settlement
together with a successful future capital raising will be critical to the future success of the Group.
Registered office Company secretary
202 Waterfront Terraces A Rich (on behalf of Statucor Proprietary Limited)
Waterfront Road Auditors
Tygervalley Waterfront Grant Thornton Cape Inc.
7530 Designated Advisor
Tel: +27 (12) 914 5566 PSG Capital
Transfer secretaries
Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Bierman Avenue, Rosebank, Johannesburg, 2196
Date:
30th November 2017
Date: 30/11/2017 10:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
