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Condensed unaudited consolidated financial statements for the six months ended 30 June 2018
Brainworks Limited
(Incorporated in the Republic of Mauritius)
(Registration number 115883 C1/GBL)
Share code: BWZ, ISIN MU0548S00000
CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 30 JUNE 2018
COMMENTARY
INTRODUCTION
The directors hereby present the condensed unaudited interim financial statements (“the interim financial statements) of Brainworks
Limited (“the Company”) together with its subsidiaries and associates (“the Group”) for the period ended 30 June 2018.
FINANCIAL RESULTS
Revenue
The Group’s revenue increased by 28% to close at US$31million relative to US$24million achieved during the 2017 comparable
period. Revenue growth was recorded across all the Group’s three main operating segments, with major growth being recorded by
the hospitality segment. In line with the prior year, the hospitality segment remains the major contributor to Group total revenue, with
contribution of 87% (US$27million) in line with same period in the prior year. Post elimination of intersegment revenues, the other
business segments contributed US$4 million to the current interim period total revenues, up from US$3.2million recorded during the
comparative period.
The hospitality business segment’s revenue increased by 29% to close at US$27million compared to US$21million recorded over the
same period in 2017. Both domestic and foreign revenue registered growth, achieving 26% and 32% respectively. The revenue
growth was attributable to a 10 percentage points increase in occupancy rate from 45% reported last year to 55%. Occupancy growth
was supported by strong performance from all the source markets, with local, international and regional rooms sold increasing by
16%, 26% and 22% respectively. The Group witnessed an exceptional increase in both local and foreign arrivals during what would
have traditionally been trough periods. Improved hotel occupancy resulted in the average daily rate (“ADR”) improving to US$97
from US$89 reported during the comparative period. As a result, revenue per available room (“RevPAR”) firmed by 33% to US$53
from US$40 achieved last year.
Operating expenses
At US$20 million, the Group’s operating expenses were relatively flat when compared to those recorded over the prior comparable
period.
Finance costs
Total net finance charges for the period amounted to US$2.1 million, 5% up from the US$2 million recorded during the period ended
30 June 2017. The impact of the US$13.8 million (36%) reduction in the Group debt from US$38.3million at the beginning of the
year to US$24.5million as at the end of the period under review did not yield a notable impact on the finance costs as the majority of
this debt reduction was achieved towards the end of the period under review. The Group expects the impact to be more notable
during the second half of the 2018 financial year.
Profitability
The Group recorded profit after tax of US$7.3 million during the period under review, compared to losses of US$5.2 million and
US$8 million for the interim period ended 30 June 2017 and year ended 31 December 2017 respectively. Growth in revenues against
relatively flat operating expenses and other income of US$4.5 million drove this strong performance.
Other income in particular includes profit realised from the disposal of the Group’s equity investment in GetBucks Microfinance
Bank Limited of US$3million, whilst the fair value gain from financial assets at fair value through profit or loss is largely driven by
US$4.1million fair value gain recognised on reclassification of residual equity investment from investment in associate to financial
assets at fair value through profit or loss.
These transactions are disclosed in note 7.
SIGNIFICANT TRANSACTIONS
The Group disposed of the following equity investments during the period under review:
a. Disposal of equity investment in GetBucks
During December 2017, the Group disposed of 163 769 298 of its shares (“the Shares”) held in GetBucks Microfinance Bank
Limited (“GetBucks”) for a total consideration of US$5 453 518 (“the Transaction") to related parties as defined by the listing
requirements of the JSE Limited. The JSE listing requirements prescribed that the Transaction be approved by the shareholders
of the Company.
An extraordinary general meeting of shareholders of the Company was held on 4 May 2018 (“the Effective Date”) and the
requisite shareholder approvals to give effect to the Transaction were secured. The disposal of the Shares resulted in the Group’s
shareholding in GetBucks decreasing from 31.14 % to 16.14%.
The financial impact of the Transaction is disclosed in note 7.1.
The remaining 32 644 872 GetBucks shares were disposed of subsequent to the reporting date, resulting in the Group completing
its exit from GetBucks. This transaction is more detailed on note 8.2.
b. Disposal of 100% equity investment in GetSure Life Assurance Company (Private) Limited
In line with the Group’s strategy to completely exit the financial services sector, the Group sold its entire shareholding in
GetSure Life Assurance Company (Private) Limited (“GetSure”) on 30 June 2018. GetSure had hitherto been disclosed as part of
“Financial services” on the Group’s segment report.
The financial impact of the GetSure disposal is disclosed in note 10.
OUTLOOK
The second half of the year presents the Group’s peak trading season. The Group expects conferencing and international market
business to bolster performance, particularly in our Victoria Falls properties, where inward foreign arrivals have been on the increase.
We anticipate that the New Victoria Falls Airport will continue to be a conduit for increased foreign arrivals into the destination.
Various infrastructure projects across the country, including Robert Gabriel Mugabe International Airport upgrade, Beitbridge to
Chirundu road rehabilitation and Beitbridge border post development present opportunities which the Group is set to benefit from.
The real estate segment is expected to complete its maiden residential development project and sales thereof are expected to
contribute to Group revenue growth for the year.
The Group will strive to achieve further debt reduction in the second half of the year.
FOR AND ON BEHALF OF THE BOARD
B. CHILDS P. SAUNGWEME
CHIEF EXECUTIVE OFFICER CHIEF FINANCE OFFICER
6 September 2018
CORPORATE INFORMATION
NON-EXECUTIVE DIRECTORS REGISTERED OFFICE:
Simon F.W VILLAGE (Chairman) C/o Imara Trust Company (Mauritius) Limited
Martin J. WOOD Level 2 Alexander House, Silicone Avenue,
Richard G. MUIRIMI Ebène Cybercity,
George S.J. BENNETT Republic of Mauritius
Audrey M. MOTHUPI Registration number: 115883 C1/GBL
Richard N. CHARRINGTON JSE Share code: BWZ
ISIN: MU0548S00000
EXECUTIVE DIRECTORS
Brett I. CHILDS (Chief Executive Offcer)
Peter SAUNGWEME (Chief Finance Offcer) INDEPENDENT STATUTORY AUDITOR:
PricewaterhouseCoopers
LEGAL ADVISORS Business Registration Number: F07000530,
18 CyberCity, Ebène,
Gill Godlonton and Gerrans Réduit 72201,
7th Floor, Beverley Court, Republic of Mauritius
100 Nelson Mandela Avenue,
Harare,
Zimbabwe JOHANNESBURG STOCK EXCHANGE INDEPENDENT
AUDITOR:
PricewaterhouseCoopers Inc.
Dube, Manikai and Hwacha 4 Lisbon Lane, Waterfall City, Jukskei view,
7th Floor, Mercury House, 2090,
Corner Sam Nujoma Street and Robert Mugabe Road, South Africa
24 George Silundika Avenue,
Harare,
Zimbabwe SPONSOR:
Questco Corporate Advisory Proprietary Limited
COMPANY SECRETARY 1st Floor, Yellowwood House,
Imara Trust Company (Mauritius) Limited Ballywoods Office Park,
Level 2 Alexander House, Silicone Avenue, 33 Ballyclare Drive,
Ebène Cybercity, Bryanston 2191,
Republic of Mauritius Johannesburg,
South Africa
BANKERS:
AfrAsia Bank Limited
4th Floor, NeXTeracom Tower III,
Ebène,
Republic of Mauritius
CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Audited
Unaudited Unaudited 31 December
All figures in US$ Notes 30 June 2018 30 June 2017 2017
ASSETS
Property and equipment 88 251 309 88 599 884 88 438 821
Investment property 21 876 764 23 982 605 22 254 000
Biological assets - 165 137 -
Goodwill 8 261 050 8 261 050 8 261 050
Other intangible assets - 219 195 152 906
Investments in associates 7 - 3 741 419 4 370 066
Deferred tax assets 728 068 813 984 1 343 037
Trade and other non-current assets 424 714 221 703 502 882
119 541 905 126 004 977 125 322 762
Current assets
Financial assets held at fair value through profit or loss 8 1 207 860 4 569 843 3 139 091
Inventory 7 800 178 5 597 521 7 151 702
Trade and other receivables 12 968 824 13 465 332 10 626 429
Cash and cash equivalents 8 986 825 4 600 243 10 544 319
30 963 687 28 232 939 31 461 541
TOTAL ASSETS 150 505 592 154 237 916 156 784 303
EQUITY AND LIABILITIES
Equity
Stated capital 6.6 58 535 508 55 785 508 55 785 508
Other reserves (952 394) (928 090) (916 141)
Retained earnings/(accumulated losses) 1 702 164 2 415 332 (3 394 300)
59 285 278 57 272 750 51 475 067
Non controlling interests 35 082 830 31 177 055 34 151 255
Total equity 94 368 108 88 449 805 85 626 322
Non current liabilities
Borrowings 6 446 362 12 291 921 9 935 373
Deferred tax liabilities 8 205 902 7 748 215 9 113 735
Trade payables 1 153 464 1 430 148 1 334 185
15 805 728 21 470 284 20 383 293
Current liabilities
Borrowings 18 035 313 25 027 059 28 388 655
Trade and other payables 22 252 329 17 817 315 19 014 783
Insurance liabilities - 1 004 550 2 340 555
Income tax 44 114 468 903 1 030 695
40 331 756 44 317 827 50 774 688
Total liabilities 56 137 484 65 788 111 71 157 981
TOTAL EQUITY AND LIABILITIES 150 505 592 154 237 916 156 784 303
CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
All figures in US$ Notes 30 June 2018 30 June 2017 31 December 2017
Revenue 5 31 044 251 24 216 040 58 586 714
Cost of sales and other direct costs 5 (9 602 175) (7 762 518) (19 131 121)
Gross profit 21 442 076 16 453 522 39 455 593
Gain/(loss) from financial assets at fair value through profit or
loss 3 812 373 (612 619) (2 189 551)
Profit from disposal of associate 7.2 3 005 626 - -
Loss from disposal of subsidiary 10.1 (947 341) - -
Other income 2 469 521 607 721 1 340 365
Operating expenses 5 (19 985 223) (19 978 559) (40 256 440)
(11 645 044) (19 983 457) (41 105 626)
Operating profit/(loss) before finance cost 9 797 032 (3 529 935) (1 650 033)
Net finance expense 5 (2 099 406) (1 911 834) (4 242 066)
Finance income 44 089 42 597 172 001
Finance expense (2 143 495) (1 954 431) (4 414 067)
Share profit/(loss) of associates 7 512 289 574 383 (112 732)
Profit/(loss) before income tax 8 209 915 (4 867 386) (6 004 831)
Income tax expense (905 780) (335 627) (2 042 401)
Profit/(loss) for the period 7 304 135 (5 203 013) (8 047 232)
Other comprehensive income
Foreign currency translation (losses)/gains (62 896) 11663 32 399
Total comprehensive income/(loss) for the period 7 241 239 (5 191 350) (8 014 833)
Profit/(loss) attributable to:
Owners of the parent 5674352 (5 289 888) (11 099 520)
Non-controlling interests 1 629 783 86 875 3 052 288
7 304 135 (5 203 013) (8 047 232)
Total comprehensive income/(loss) attributable to:
Owners of the parent 5 638 099 (5 219 380) (11 080 845)
Non-controlling interests 1 603 140 28030 3 066 012
7 241 239 (5 191 350) (8 014 833)
Earnings/(loss) per share (cents)
Basic 6.1 7.41 (6.99) (14.68)
Diluted 6.2 7.41 (6.99) (14.68)
Headline 6.3 (0.63) (7.01) (14.22)
Weighted average number of shares in issue 6.6 765 94 158 75 625 640 75 625 640
Number of shares in issue 6.6 78 531 196 75 625 640 75 625 640
CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2018
ATTRIBUTABLE TO OWNERS OF THE COMPANY
(Accumulated
Share losses)/ Non-
Stated capital and Other retained controlling
All figures in US$ Note Capital premium reserves earnings Total interests Total
SIX MONTHS ENDED 30 JUNE
2018
Balance as at 1 January 2018 (as
previously stated) 55 785 508 - (916 141) (3 394 300) 51 475 067 34 151 255 85 626 322
Restatement as a result of adoption of
IFRS 9 3.3.2 - - - (442 888) (442 888) (325 481) (768 369)
55 785 508 - (916 141) (3 837 188) 51 032 179 33 825 774 84 857 953
Total comprehensive income:
Profit for the period - - - 5 674 352 5 674 352 1 629 783 7 304 135
Other comprehensive income for the
period - - (36 253) - (36 253) (26 643) (62 896)
Dividends declared and paid to
non-controlling interests - - - - - (346 084) (346 084)
Total comprehensive income for
the period - - (36 253) 5 674 352 5 638 099 1 257 056 6 895 155
Transactions with owners in their
capacity as owners:
Derecognition of treasury shares 6.6 2 750 000 - - (135 000) 2 615 000 - 2 615 000
2 750 000 - - (135 000) 2 615 000 - 2 615 000
Balance as at 30 June 2018 58 535 508 - (952 394) 1 702 164 59 285 278 35 082 830 94 368 108
SIX MONTHS ENDED 30 JUNE
2017
Balance as at 1 January 2017 - 58 535 508 (934 816) 7 705 220 65 305 912 31 085 243 96 391 155
Total comprehensive income:
Loss/(profit) for the period - - - (5 289 888) (5 289 888) 86 875 (5 203 013)
Other comprehensive income - - 6 726 - 6 726 4 937 11 663
Total comprehensive income
for the period - - 6 726 (5 289 888) (5 283 162) 91 812 (5 191 350)
Transactions with owners in their
capacity as owners:
Conversion of par to no par value
shares 58 535 508 (58 535 508) - - - - -
Recognition of treasury shares 6.6 (2 750 000) - - - (2 750 000) - (2 750 000)
55 785 508 (58 535 508) - - (2 750 000) - (2 750 000)
Balance as at 30 June 2017 55 785 508 - (928 090) 2 415 332 57 272 750 31 177 055 88 449 805
ATTRIBUTABLE TO OWNERS OF THE COMPANY
Retained
Share earnings/ Non-
Stated capital and Other (accumulated) controlling
All figures in US$ Note Capital premium reserves losses) Total interests Total
YEAR ENDED 31 DECEMBER
2017
Balance as at 1 January 2017 - 58 535 508 (934 816) 7 705 220 65 305 912 31 085 243 96 391 155
Total comprehensive income:
(Loss)/profit for the year - - - (11 099 520) (11 099 520) 3 052 288 (8 047 232)
Other comprehensive income - - 18 675 - 18 675 13 724 32 399
Total comprehensive income
for the year - - 18 675 (11 099 520) (11 080 845) 3 066 012 (8 014 833)
Transactions with owners in their
capacity as owners:
Recognition of treasury shares - (2 750 000) - - (2 750 000) - (2 750 000)
Conversion of shares to shares of no
par value 6.6 55 785 508 (55 785 508) - - - - -
Balance as at 31 December 2017 55 785 508 - (916 141) (3 394 300) 51 475 067 34 151 255 85 626 322
CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Audited
Unaudited Unaudited Year ended
6 months ended 6 months ended 31 December
All figures in US$ Notes 30 June 2018 30 June 2017 2017
Operating cashflows before working capital changes 5 420 300 (884 565) 6 337 178
Working capital changes:
Increase in inventory (648 476) (803 757) (2 357 938)
(Decrease)/increase in trade and other receivables (2 092 626) 312 994 (685 391)
Increase in trade and other payables 2 884 309 4 042 798 5 512 109
Cash generated from operations 5 563 507 2 667 470 8 805 958
Income tax paid (1 623 606) (298 267) (581 123)
Interest received 44 089 42 597 172 001
Interest paid (1 583 438) (1 627 764) (3 660 408)
Dividends received 61 375 108 988 283 178
Dividends declared and paid to non-controlling interests (346 084) - -
Net cash generated from operating activities 2 115 843 893 024 5 019 606
Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss - (289 500) (435 680)
Proceeds from disposal of treasury shares 6.6.2 1 006 557 - -
Proceeds from disposal of financial assets at fair value through
profit or loss 2 641 497 - 90 000
Proceeds from disposal of property and equipment 565 262 413 334 983 315
Purchase of equipment (2 371 212) (1 712 043) (3 276 078)
Capital expenditure on investment property - (6 370) (62 267)
Cash and cash equivalents transferred on disposal of subsidiary 10.2 (482 511) - -
Net cash generated from /(used in) investing activities 1 359 593 (1 594 579) (2 700 710)
Cash flows from financing activities
Proceeds from borrowings 88 296 6 279 405 19 125 974
Repayment of borrowings (5 097 562) (6 581 219) (16 508 398)
Net cash (used in)/generated from financing activities (5 009 266) (301 814) 2 617 576
Net (decrease)/increase in cash and cash equivalents (1 533 830) (1 003 369) 4 936 472
Exchange (gains)/losses on cash and cash equivalents (23 664) 10 602 15 837
Cash and cash equivalents at beginning of the period 10 544 319 5 593 010 5 593 010
Cash and cash equivalents at end of the period 8 986 825 4 600 243 10 544 319
NOTES TO THE CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
1 GENERAL INFORMATION
Brainworks Limited (“the Company”) and its subsidiaries and associates (together “the Group”) has a diversified portfolio
of business interests in hospitality, real estate, and energy logistics sectors in Zimbabwe.
Brainworks was incorporated in the Republic of Mauritius on 22 April 2013. The Company is domiciled in the Republic of
Mauritius and has its registered office at c/o Imara Trust Company (Mauritius) Limited, Level 2 Silicone Avenue, Alexander
House, 35 Ebène, Cybercity, Republic of Mauritius. The Company was listed on the Johannesburg Stock Exchange (“JSE”)
on 13 October 2017.
The Company is the holder of a Category 1 Global Licence under the Mauritius Companies Act 2001 and the Financial
Services Act 2007.
2 BASIS OF PREPARATION
The condensed unaudited consolidated interim financial statements (the “interim financial statements”) for the period ended
30 June 2018 have been prepared in accordance with the requirements of the JSE Limited Listings Requirements for interim
reports. The Listings Requirements require interim reports to be prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”), the preparation and disclosure requirements of International
Accounting Standard 34 - Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council
(“FRSC”).
These interim financial statements have not been audited or reviewed by the Company’s independent auditor.
The Chief Finance Officer, Peter Saungweme CA(Z), supervised the preparation of the interim financial statements. The
accounting policies applied in the preparation of the interim financial statements are in terms of IFRS and are consistent
with those applied in the previous interim financial statements for the period ended 30 June 2017 and year ended 31
December 2017, other than as described in note 3.
The interim financial statements do not contain all the notes of the type normally included in the annual financial statements.
Accordingly, these interim financial statements should be read in conjunction with the consolidated financial statements for
the year ended 31 December 2017, which were prepared in accordance with IFRS, and any public announcements made by
the Company during the interim reporting period.
The interim financial statements are expressed in the United States of America dollar (“US$”) and are prepared under the
historical cost convention as modified by the fair valuation of financial assets at fair value through profit or loss and
investment property.
3. ACCOUNTING POLICIES
The accounting policies adopted are prepared in accordance with IFRS and are consistent with those adopted in the
preparation of the financial information for all the prior periods presented. Taxes on income in the interim period are
measured using the tax rate that is expected to be applicable to the full year profit or loss.
3.1 New and amended standards adopted by the Group
a) IFRS 9 - Financial instruments
IFRS 9, ‘Financial instruments’, amended and effective 1 January 2018, replaces the guidance in IAS 39, Financial
instruments: recognition and measurement. It includes requirements on the classification and measurement of financial
assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment
model.
The Group had to change its accounting policies and make retrospective adjustments as a result of adopting IFRS 9 -
Financial Instruments. The impact of the adoption of these standards and the new accounting policies are disclosed in 3.3
below.
b) IFRS 15 - Revenue from Contracts with Customers
IFRS 15, ‘Revenue from contracts with customers’, e?ective 1 January 2018, establishes principles for reporting useful
information to users of the financial statements about the nature, amount, timing and uncertainty of revenue and cash flows
arising from an entity’s contracts with customers.
The standard resulted in changes in narratives for accounting policies but did not change the timing of revenue recognition
for the Group.
The other standards and/or amendments that became effective during the period under review did not have an impact on the
Group.
3.2 Impact of standards issued but not yet adopted
IFRS 16 - Leases
IFRS 16 is effective on 1 January 2019 and sets out the principles for the recognition, measurement, presentation and
disclosure of leases for both parties to a contract, i.e. the customer (‘‘lessee’’) and the supplier (‘‘lessor’’). IFRS 16 is a far
reaching change in accounting by lessees in particular.
Under IAS 17, ‘Leases’, lessees were required to make a distinction between a finance lease (on statement of financial
position) and an operating lease (on statement of financial position). IFRS 16 now requires lessees to recognise a lease
liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. The IASB has included an
optional exemption for certain short term leases and leases of low value assets. However, this exemption can only be
applied by lessees.
The accounting for lessors will not significantly change.
The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group had
cancellable operating lease arrangement for hotels leased from parties outside of the Group. However, the Group has not yet
determined to what extent these commitments will result in the recognition of an asset and a liability for future payments
and how this will affect the Group’s profit and classification of cash flows.
Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments
may relate to arrangements that will not qualify as leases under IFRS 16.
The standard is mandatory for first interim periods within annual reporting periods beginning on or after 1 January 2019.
The Group does not intend to adopt the standard before its effective date.
3.3 Impact of adoption of IFRS 9
This note explains the impact of the adoption of IFRS 9, “Financial instruments” on the Group’s interim financial
statements and also discloses the new accounting policies that have been applied from 1 January 2018, where they are
different to those applied in prior periods.
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets
and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of IFRS 9, “Financial instruments” from 1 January 2018 resulted in changes in accounting policies and
adjustments to the amounts recognised in the financial statements. In accordance with the transitional provisions in IFRS 9
(7.2.15) and (7.2.26), comparative figures have not been restated. The reclassifications and the adjustments arising from the
new impairment rules are therefore not reflected in the restated statement of financial position as at 31 December 2017, but
Classification and measurement
On 1 January 2018 (the date of initial application of IFRS 9), the Group’s management assessed which business models
apply to the financial assets held by the Group and has classified its financial instruments into the appropriate IFRS 9
categories. The impact on classification and measurement of the classes of financial assets of the Group, as at 31 December
2017 on adoption of the new accounting policies is outlined below:
IAS 39 IFRS 9
Carrying amount Carrying amount
Financial Assets Classification US$ Classification US$
Fair value through profit or Fair value through profit or
Listed equity security loss 2 459 174 loss 2 459 174
Fair value through profit or Fair value through profit or
Treasury bills loss 679 917 loss 679 917
Trade receivables Amortised cost (loans and
receivables) 3 814 027 Amortised cost 3 128 584
Other receivables Amortised cost (loans and
receivables) 6 387 139 Amortised cost 6 166 486
Staff receivables Amortised cost (loans and
receivables) 928 145 Amortised cost 832 552
Cash and cash Amortised cost (loans and
equivalents receivables) 10 544 319 Amortised cost 10 544
Impairment of financial assets
The Group has financial assets that are subject to IFRS 9’s new expected credit loss model. These comprise trade and other
receivables, as well as cash and cash equivalents.
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, no impairment loss was
identified.
Impairment - trade and other receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and staff loans.
To measure the expected credit losses, the various categories of trade receivables have been grouped based on shared credit
risk characteristics and the days past due. The Group uses judgement in making these assumptions and selecting the inputs
to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking
estimates at the end of each reporting period.
On that basis, the loss allowance as at 1 January 2018 was determined as follows for trade receivables.
More than 30 More than 60 More than 90 More than 120
Current days past due days past due days past due days past due Total
1 January 2018
Trade receivables
Expected loss rate 6% 6% 8% 46% 96%
Gross carrying amount 1 628 459 912 557 542 666 352 673 1 130 701 4 576 056
Loss allowance (96 764) (58 718) (44 484) (163 948) (1 083 558) (1 447 472)
Carrying amount 1 531 695 862 839 498 182 188 725 47 143 3 128 584
The loss allowances for trade receivables and other financial assets at armotised costs as at 31 December 2017 reconcile to
the opening loss allowance on 1 January 2018 as follows:
Other financial
Trade assets at
All figures in US$ receivables armotised cost Total
As at 31 December 2017 - calculated under IAS 39 762 029 629 106 1 391 135
Increase in loss allowance charged to retained earnings 685 443 316 246 1 001 689
Opening loss allowance as at 1 January 2018 - calculated under IFRS 9 1 447 472 945 352 2 392 824
Impairment allowance of US$629 106 was allocated to trade receivables instead of other receivables at 31 December 2017.
The reallocation does not have an impact on previously disclosed total trade and other receivables disclosed on the
statement of financial position.
Impairment - other financial assets at armotised cost
Other financial assets at amortised cost include staff loans and other receivables. Applying the expected credit loss model
resulted in the recognition of an additional loss allowance of US$316 246 on 1 January 2018 (previous loss allowance was
US$625 282).
3.3.2 Impact on the financial statements
The following table shows the adjustments recognised for each individual line item. Line items that were not affected by the
changes have not been included.
31 December
2017 1 January
As originally IFRS 9 2018
All figures in US$ presented adjustment Restated
Statement of financial position (extract)
Non-current assets
Trade and other non-current assets 502 882 (1 912) 500 970
Current assets
Trade receivables 3 814 027 (685 443) 3 128 584
Other receivables at armotised cost 6 812 402 (314 334) 6 498 068
10 626 429 (999 777) 9 626 652
Total assets 11 129 311 (1 001 689) 10 127 622
Non-current liabilities
Deferred tax liabilities (9 113 735) 233 320 (8 880 415)
Net assets 2 015 576 (768 369) 1 247 207
Equity
Accumulated losses (3 394 300) (768 369) (4 162 669)
3.3.3 Impact on accounting policies applied from 1 January
2018 Classification
From 1 January 2018, the Group classifies its financial assets in the following measurement categories:
i) those to be measured subsequently at fair value (either through Other comprehensive income (“OCI”), or through profit or
loss); and
ii) those to be measured at amortised cost.
The classification depends on each entity’s business model for managing the financial assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time
of initial recognition to account for the equity investment at fair value through other comprehensive income (“FVOCI”).
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Impairment
From 1 January 2018, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.
4 SIGNIFICANT ESTIMATES
Impairment of financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group
uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s
past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of
the key assumptions and inputs used are disclosed in the table above.
5 SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Executive Committee that makes strategic decisions.
Revenue
The revenue from external parties reported to the Executive Committee is measured in a manner consistent with how
revenue is measured in the statement of comprehensive income. The Group does not rely on any one specific customer as
none of its customers contribute a minimum of 10% of its revenue. There has been no change in the basis of measurement or
segmentation since the last annual financial statements.
The amounts provided to the Executive Committee with respect to total assets are measured in a manner consistent with that
of the annual financial statements. These assets are allocated based on the operations of the segment and the physical
location of the asset.
Description of segments and principal activities
Entity Segment 2017 2016 Principal activities
African Sun Limited Hospitality ? ? Hotel and hospitality operations
Property holding, development and
Dawn Properties Limited Real estate ? ? consulting.
GetSure Life Assurance
(Private)Limited Financial services ** ? Life assurance products and services
FML Logistics (Private) Limited Other ? ? Fuel transportation services
Brainworks Capital
Management (Private) Limited Other ? ? Investment holding company in Zimbabwe
Brainworks Limited Other ? ? Ultimate parent company in Mauritius
? - denotes that the respective entity was part of the Group during the relevant year.
** - The entire equity interest in this subsidiary was disposed of on 30 June 2018. Refer to note 10 for further disclosures.
Summarised segment information
UNAUDITED
Financial
All figures in US$ Hospitality Real estate services Other Eliminations Group
Six months ended 30 June 2018
Revenue
- external customers 27 041 297 1 564 951 1 154 826 1 283 177 - 31 044 251
- internal customers - 1 518 535 - (1 518 535) -
27 041 297 3 083 486 1 154 826 1 283 177 (1 518 535) 31 044 251
Cost of sales and other related costs (8 202 848) - (752 159) - (647 168) (9 602 175)
Gross profit 18 838 449 3 083 486 402 667 1 283 177 (2 165 703) 21 442 076
Operating expenses (16 474 665) (1 626 098) (655 633) (2 382 926) 1 154 099 (19 985 223)
Share of loss of associates - - 302 654 209 635 - 512 289
Operating profit before finance costs 4 229 398 1 540 328 3 724 928 1 773 668 (1 471 290) 9 797 032
Net finance (costs)/income (319 793) (128 191) 59135 (1 782 179) 71 622 (2 099 406)
Profit /(loss) before income tax 3 909 605 1 412 137 3 784 063 (8 511) (887 379) 8 209 915
Total assets as at 30 June 2018 38 515 034 100 082 392 - 72 938 231 (61 030 065) 150 505 592
Property and equipment 22 072 977 62 998 405 - 3 544 362 (364 435) 88 251 309
Goodwill 8 261 050 - - - - 8 261 050
30 334 027 62 998 405 - 3 544 362 (364 435) 96 512 359
Total liabilities as at 30 June 2018 25 329 277 11 827 907 - 27 259 657 (8 279 357) 56 137 484
UNAUDITED
Six months ended 30 June 2017
Revenue
- external customers 21 012 102 1 071 739 795 068 1 360 589 (23 458) 24 216 040
- internal customers - 1 139 672 - - (1 139 672) -
21 012 102 2 211 411 795 068 1 360 589 (1 163 130) 24 216 040
Cost of sales and other related costs (6 700 874) - (393 473) (668 171) - (7 762 518)
Gross profit 14 311 228 1 071 739 401 595 692 418 (23 458) 16 453 522
Operating expenses (14 363 132) (1 653 698) (539 641) (3 385 508) (36 580) (19 978 559)
Share of profit of associates - - - 574 383 - 574 383
Operating (loss)/profit before finance
costs 507 171 585 211 222 528 (1 044 407) (3 800 438) (3 529 935)
Net finance (costs)/income (470 622) (141 631) 73 574 (1 373 155) - (1 911 834)
Profit/(loss) before tax 36 550 443 580 296 102 (5 643 618) - (4 867 386)
Total assets as at 30 June 2017 32 532 846 95 366 523 5 371 770 100 014 406 (79 047 629) 154 237 916
Total assets include:
Property and equipment 20 886 916 886 968 200 058 3 964 140 62 661 802 88 599 884
Goodwill 8 261 050 - - - - 8 261 050
29 147 966 886 968 200 058 3 964 140 62 661 802 96 860 934
AUDITED
Financial
All figures in US$ Hospitality Real estate services Other Eliminations Group
Year ended 31 December 2017
Revenue
- external customers 51 827 232 2161 573 1 880 963 2 716 946 - 58 586 714
- internal customers - 2970 210 - - (2 970 210) -
51 827 232 5 131 783 1 880 963 2 716 946 (2 970 210) 58 586 714
Cost of sales and other related costs (15 444 453) - (2 343 465) (1 343 203) - (19 131 121)
Gross profit/(loss) 36 382 779 2 161 573 (462 502) 1 373 743 - 39 455 593
Operating expenses (31 022 450) (2 919 369) (1 118 175) (7 437 786) 2 241 340 (40 256 440)
Operating profit(loss) before finance
costs 6 905 535 4228 147 (1 388 913) (11 786 329) 391 527 (1 650 033)
Share of profit/(loss) of associates - - 829 745 615 289 (1 557 766) (112 732)
Net finance costs/(income) (1 046 123) (327 280) 128 998 (3 165 296) 167 635 (4 242 066)
Profit/(loss) before tax 5 859 412 3 900 867 (430 170) (14 336 336) (998 604) (6 004 831)
Total assets as at 31 December 39 226 663 97 987 352 5 926 758 78 456 611 (64 813 081) 156 784 303
2017
Total assets include:
Property and equipment 21284 122 63326 245 144 583 4 063 741 (379 870) 88 438 821
Goodwill 8 261 050 - - - - 8 261 050
29 545 172 63 326 245 144 583 4 063 741 (379 870) 96 699 871
Audited
Unaudited Unaudited Year ended
6 months ended 6 months ended 31 December
All figures in US$ 30 June 2018 30 June 2017 2017
6 EARNINGS PER SHARE
6.1 Basic earnings/(loss) per share (cents) 7.41 (6.99) (14.68)
6.2 Diluted earnings/(loss) per share (cents) 7.41 (6.99) (14.68)
6.3 Headline loss per share (cents) (0.63) (7.01) (14.22)
6.4 Diluted headline loss per share (cents) (0.63) (7.01) (14.22)
6.5 Reconciliation of earnings used in calculating earnings per share
Earnings/(losses) attributable to owners of parent 5 6743 52 (5 289 888) (11 099 520)
Adjusted to headline earnings as follows:
Loss from disposal of subsidiary 947 341 - -
Fair value gain on reclassification of investment in associate to
financial assets at fair value through profit or loss (4 082 299) - -
Profit from disposal of investment in associate (note 7.2) (3 005 626) - -
Fair value loss on investment property - - 384 502
Recycled foreign currency translation reserve - (11 663) -
(Profit)/loss from disposal of property and equipment (162 931) (5 100) 203 751
Impairment of property and equipment 48 615 - 44 400
Tax effect of headline earnings adjustments 40 823 - (110 442)
Total non-controlling effect of adjustments 54 077 4 937 (175 457)
Headline losses attributable to owners of parent (485 648) (5 301 714) (10 752 766)
Audited
Unaudited Unaudited Year ended
6 months ended 6 months ended 31 December
Number 30 June 2018 30 June 2017 2017
6.6 Weighted average number of shares in issue
Shares at the beginning of the period 75 625 640 863 061 948 863 061 948
Share consolidation (note 6.6.1) - (776 755 753) (776 755 753)
Treasury shares (note 6.6.2) - (10 680 555) (10 680 555)
Derecognition of treasury shares (note 6.6.2) 968 518 - -
Shares at the end of the period 76 594 158 75 625 640 75 625 640
Weighted average number of shares for basic earnings per share 76 594 158 75 625 640 75 625 640
Weighted average number of shares for diluted earnings per share 76 594 158 75 625 640 75 625 640
Number of shares in issue 78 531 195 75 625 640 75 625 640
6.6.1 Share consolidation
In preparation of Brainworks Limited listing on the Johannesburg Stock Exchange in 2017, the Company consolidated the
number of shares in issue on the basis of 1 new share for every 10 previously held.
6.6.2 Treasury shares
The treasury shares relate to shares in Brainworks Limited (“the Company”) which are held by Brainworks Capital
Management (Private) Limited (“BCM”). BCM is a wholly owned subsidiary of the Company. All the treasury shares are
held through a nominee company called Adcone Holdings SA (“the nominee”).
7 775 000 of the treasury shares arose from a 2015 Group re-organisation exercise which culminated in Brainworks Limited
being the ultimate holding company, owning all the issued shares in BCM. BCM had hitherto been the holding company,
holding all the issued shares of the Company. To achieve the Group re-organisation, the shareholders of BCM gave up their
shares in BCM to Brainworks Limited as consideration, for which in return they received an equivalent number of shares
with the same rights in Brainworks Limited.
At the time of the Group re-organisation, BCM had 7 775 000 of its own ordinary shares held as treasury shares, which
shares were given up to Brainworks Limited. As consideration, BCM was issued with 7 775 000 ordinary shares in
Brainworks Limited, which shares BCM holds through the nominee. The additional 2 905 556 which existed as at 31
December 2017 were acquired in January 2017 from the former Chief Executive Officer of the Company, in exchange for a
receivable which was held by BCM.
2 905 556 treasury shares were disposed of to parties outside the Group for US$2 615 000, resulting in the recognition of a
loss of US$135 000, which has been recognized directly in equity. US$1 006 557 of the total proceeds were received in
cash, whilst the balance was used to settle a loan that was held by FML Logistics (Private) Limited. The 2 905 556 share
have therefore been derecognized as treasury shares with effect from the same date. For earnings per share calculation
purposes, these shares have been deemed to have been outstanding for only two months.
Audited
Unaudited Unaudited Year ended
6 months ended 6 months ended 31 December
All figures in US$ 30 June 2018 30 June 2017 2017
6.7 Net asset value per share
Net assets (excluding non-controlling interests ("NCI") 59 285 278 57 272 750 51 475 067
Number of ordinary shares in issue 78 531 196 75 625 640 75 625 640
Net asset value per share (cents) 75.49 75.73 68.07
6.8 Net tangible asset value per share
Net tangible assets 50 296 160 47 978 521 41 718 074
Number of ordinary shares 78 531 196 75 625 640 75 625 640
Net asset value per share (cents) 64.05 63.44 55.16
Reconciliation of net asset to net tangible assets
Net assets (excluding NCI) 59 285 278 57 272 750 51 475 067
Non-tangible assets (8 989 118) (9 294 229) (9 756 993)
Goodwill (8 261 050) (8 261 050) (8 261 050)
Deferred tax assets (728 068) (813 984) (1 343 037)
Other intangible assets - (219 195) (152 906)
Net tangible assets 50 296 160 47 978 521 41 718 074
7 INVESTMENT IN ASSOCIATES
7.1 Disposal of investment in associate
During December 2017, the Group initiated disposal of 163 769 298 of its shares (“the Shares”) held in GetBucks
Microfinance Bank Limited (“GetBucks”) for a total consideration of US$5 453 518 (“the Transaction’’) to related parties
as defined by the listing requirements of the JSE Limited. Pending approval of the Transaction, the buyers advanced the
Group the total consideration of US$5 453 518 as a loan bearing interest at 9% per annum which was going to be settled
through delivery of the Shares on approval of the Transaction by the Company’s shareholders. The interest accrued was also
going to be settled by a commensurate number of shares at a pre-agreed price of US$0.0333 per share. The JSE listing
requirements prescribed that the Transaction be approved by the shareholders of the Company.
An extraordinary general meeting of shareholders of the Company was held on 4 May 2018 (“the Effective Date”) and the
requisite shareholder approvals to give effect to the Transaction were secured.
The disposal of the 163 769 298 shares resulted in the Group’s shareholding in GetBucks decreasing from 31.14 % to
16.14%. The Group concluded that the Transaction resulted in the loss of significant influence over GetBucks. As a result,
the Group reclassified the remaining equity investment in GetBucks from investment in associates to financial assets at fair
value through profit or loss with effect from the Effective Date.
The impact of the Transaction on the financial statements is as follows:
Audited
Unaudited Unaudited Year ended
6 months ended 6 months ended 31 December
All figures in US$ 30 June 2018 30 June 2017 2017
Balance as at the beginning of the period 4 370 066 3 276 024 3 276 024
Additional investment in GetCash - - 1 489 952
Share of profit/(loss) of associate 512 289 574 383 (112 732)
Dividends paid (149 836) (108 988) (283 178)
Equity accounted carrying amount of total investment before
the Transaction 4 732 519 3 741 419 4 370 066
Disposal in terms of the Transaction (2 272 507) - -
Equity accounted carrying amount of remaining investment 2 460 012 3 741 419 4 370 066
Fair value gain on remeasurement of carrying amount of equity
accounted investment to financial asset at fair value through profit
or loss* 4 082 299 - -
Transfer to financial assets at fair value through profit or loss (6 542 311) - -
Balance as at the end of the period - 3 741 419 4 370 066
* - included in “loss/(gain) from financial assets at fair value through profit or loss” in the statement of comprehensive
income.
The fair value of the investment in GetBucks as at the date of disposal of the shares was determined based on the Zimbabwe
Stock Exchange price.
7.2 Profit from disposal of associate
Included in “Other income” for the interim period ended 30 June 2018 is profit of US$3 005 626 realised from the disposal
of the equity investment in GetBucks as disclosed above. The profit has been determined as follows:
Unaudited
6 months ended
All figures in US$ 30 June 2018
Consideration received 5 453 518
Transaction costs (175 385)
Net proceeds 5 278 133
Equity carrying amount of investment portion sold (note 7.1) (2 272 507)
Profit on disposal of associate (included in "Other income") 3 005 626
8 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Audited
Unaudited Unaudited Year ended
6 months
6 months ended ended 31 December
All figures in US$ 30 June 2018 30 June 2017 2017
Balance as at the beginning of the period 3 139 091 4 892 962 4 892 962
Purchases of treasury bills - 289 500 435 680
Transfer from investment in associates (GetBucks shares) (note 7.1) 6 542 311 - -
Fair value gains/(losses) 979 561 (612 619) (2 189 551)
Disposals (6 807 144) - -
MyBucks listed equity investment (3 438 785) - -
Sale of GetBucks shares after reclassification from investment in
associate (8.2) (3 368 359) - -
Maturity of treasury bills (155 733) - -
GetBucks shares given up to settle interest on a loan post reclassification
from investment in associate (note 8.1) (269 646) - -
Derecognition of financial assets at fair value through profit or loss on
disposal of subsidiary (note 10.2) (2 220 540) - -
Balance as at the end of the period 1 207 860 4 569 843 3 139 091
As at the end of the period:
Financial assets at fair value through profit or loss comprise of
following:
Listed MyBucks shares - 4 124 613 2 459 174
Treasury Bills - 445 230 679 917
Listed GetBucks shares* 1 207 860 - -
1 207 860 4 569 843 3 139 091
* represents 32 644 872 shares at a Zimbabwe Stock Exchange listed price of US$0.037 per share.
8.1 Settlement of interest through delivery of GetBucks shares
As noted in note 7.1, the Group had a commitment to settle interest accruing on a US$5 453 518 loan (“the Loan). The total
interest that accrued on the Loan amounted to US$242 681. The interest was calculated up to 7 June 2018 which was the
settlement date of the interest. The Group transferred 7 287 734 GetBucks shares at the pre-agreed price of US$0.0333 per
share. The fair value price per share based on the Zimbabwe Stock Exchange price on settlement date was US$0.037 per
share. This resulted in the recognition of a loss of US$26 965. The GetBucks shares given up were derecognized at their
aggregate fair value of US$269 646.
8.2 Other disposal of GetBucks shares
Subsequent to the reclassification of the investment in GetBucks shares from investment in associate to financial assets at
fair value through profit or loss, the Group disposed of 91 036 739 GetBucks shares to a third party (“the Buyer”). As
consideration, the Buyer agreed to settle in full the Group’s outstanding loan with GetBucks of US$3 064 219. The fair
value of the shares transferred, based on the ZSE quoted price of US$0.037 per share was US$3 369 507. This resulted in
the recognition of loss on disposal of US$305 288. The loss is included in “Other income”.
9 FAIR VALUE MEASUREMENTS
9.1 Fair value measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the
characteristics of the asset or liability if market participants would take those characteristics into account when pricing the
asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial
statements is determined on such a basis, except for share-based payment transactions, leasing transactions, and
measurements that have some similarities to fair value but are not fair value, such as net realisable value in ‘inventories’ or
value in use in ‘impairment of assets’.
9.2 Fair value hierarchy
Fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are
described as follows:
Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in
active markets that the Group has the ability to access;
Level 2 - inputs are other than quoted prices included within level 1, that are observable for the asset or liability, either
directly or indirectly. Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active
markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are
observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by
correlation or other means; and
Level 3 - inputs are unobservable inputs for the asset or liability inputs to the valuation methodology are unobservable and
significant to the fair value measurement.
Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices for the listed equities; and
- the fair values for treasury bills have been determined based on present values and the discount rates used were adjusted
for counterparty or own credit risk.
To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its
financial instruments into the three levels as follows:
All figures in US$ Level 1 Level 2 Level 3 Total
Recurring fair value measurements as at
30 June 2018
Financial assets
Financial assets at fair value through profit or loss:
- Zimbabwe Stock Exchange listed equity securities 1 488 185 - - 1 488 185
Recurring fair value measurements as at
30 June 2017
Financial assets
Financial assets at fair value through profit or loss:
- Frankfurt Stock Exchange listed equity securities 4 124 613 - - 4 124 613
- Treasury bills - - 445 230 445 230
Total 4 124 613 - 445 230 4 569 843
Recurring fair value measurements as at
31 December 2017
Financial assets
Financial assets at fair value through profit or loss:
- Frankfurt Stock Exchange listed equity securities 2 459 224 - - 2 459 224
- Treasury bills - - 679 867 679 867
Total 2 459 224 - 679 867 3 139 091
9.3 Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the periods ended 30 June 2018 and 30 June 2017, and the year
ended 31 December 2017:
TREASURY BILLS
Audited
Unaudited Unaudited Year ended
6 months ended 6 months ended 31 December
All figures in US$ 30 June 2018 30 June 2018 2017
At the beginning of the period/year 679 867 155 730 155 730
Treasury bills - purchased during the period/year - 289 500 435 630
Treasury bills - matured during the period/year (155 773) - -
Fair value gain recognised on Treasury bills - - 88 507
Derecognition on disposal of subsidiary (note 10.2) (524 094) - -
Balance at the end of the period/year* - 445 230 679 867
* the period/year end balance is included in “financial assets at fair value through profit or loss” on the statement of
financial position.
10 DISPOSAL OF A SUBSIDIARY
On 30 June 2018, the Group sold 100% of its equity investment in GetSure Life Assurance Company (Private) Limited. The
disposal was part of the Group’s strategy to exit its financial services sector investments. GetSure had hitherto been
disclosed as part of “Financial services” on the Group’s segment report.
Unaudited
6 months ended
All figures in US$ 30 June 2018
10.1 Loss on sale of subsidiary
Consideration receivable 6 203 190
Carrying amount of net assets sold (note 10.2) 7 150 531
Loss on disposal (included in "Other income") (947 341)
10.2 Net assets sold on disposal of subsidiary
The carrying amount of assets and liabilities as at the date of disposal (30 June 2018) were as follows:
Total assets
Investment property 380 000
Equipment 127 774
Intangible assets 1308 09
Financial assets at fair value through profit or loss 2 220 540
Trade and other receivables 6 964 833
Cash and cash equivalents 482 511
10 306 467
Trade creditors 649 285
Insurance liabilities 2 505 336
Deferred tax liability 1 315
3 155 936
Net assets 7 150 531
11 MATERIAL RELATED PARTY TRANSACTIONS
Included in the current portion of the borrowings as at 30 June 2018 is an amount of US$2.5million due to Mr. Christopher
Rokos which was advanced to the Company in December 2017. The loan, which is unsecured, bears interest at 15% per
annum and is due for full repayment on demand.
Mr. Rokos has a significant indirect beneficial shareholding in the Company.
12 SUBSEQUENT EVENTS
Disposal of the Group’s remaining investment in GetBucks
Subsequent to the reporting date, the Group sold its entire remaining shareholding in GetBucks of 32 644 872 shares to
complete its strategy of exiting the financial services sector.
13 CONTINGENT LIABILITY
Tax claims against Brainworks Capital Management (Private) Limited
The Group is defending tax claims from the Zimbabwe Revenue Authority (“ZIMRA”) arising from assessments issued by
ZIMRA to Brainworks Capital Management (Private) Limited (“BCM”) in relation to Value Added Tax, Pay As You Earn,
Income Tax and Withholding Tax. The total claims comprise of taxes of US$10.75million and penalties and interest of US$10.18
million. Based on advice from independent legal counsel and tax experts that these claims are unsustainable, BCM filed an appeal
with the relevant tax courts in Zimbabwe.
14 GOING CONCERN
As at 30 June 2018, the Group’s current liabilities exceeded its current assets by US$9.4million. Loans maturing within the
next 12 months amounted to US$18million, US$15million of which was jointly due by Brainworks Capital Management
(Private) Limited and Brainworks Limited. The balance of US$3million was held at the operating subsidiaries level.
In spite of the working capital still being negative as at 30 June 2018, the current position reflects notable improvement
relative to the negative working capital positions of US$16.1million and US$19.3million as at 30 June 2017 and 31
December 2017 respectively. The improvement is largely attributable to the reduction in total Group debt from
US$37.3 million as at 30 June 2017 to US$24.5 million as at 30 June 2018.
The Group is continuously considering mechanisms to raise equity capital. Further announcements would be made as the
Company progresses.
The Board has therefore not identified events or conditions that individually or collectively cast significant doubt on the
ability of the Company and/or the Group to continue as a going concern.
15 DIVIDEND
No dividend was declared during the interim period.
Date: 06/09/2018 03:42:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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