| Tue 23 Sep 2008, 16:43 | | ADW - African Dawn Capital Limited - Reviewed interim results for the 6 months |
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ADW
ADW
ADW - African Dawn Capital Limited - Reviewed interim results for the 6 months
ended 31 August 2008
AFRICAN DAWN CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/020520/06)
JSE code: ADW ISIN: ZAE000060703
("African Dawn" or "the company" or "the group")
HIGHLIGHTS
* Earnings per share increased by 175% to 43,0 cents (2007 : 15,6 cents) for
the 6 months ended 31 August 2008.
* After tax earnings increased by 248% to R88,2 million (2007: R25,3 million)
for the six months ended 31 August 2008.
* Revenue increased by 415% to R307 million (2007: R59 million) for the 6
months ended 31 August 2008.
* Total Group assets increased by 348% to R1 billion for the first time, up
from R252 million at 31 August 2008.
* Net asset value per share increased to 219,32 cents per share at 31 August
2008, compared to 106,09 cents at 31 August 2007.
Reviewed Reviewed Audited 28 Feb
31 Aug 2008 31 Aug 2007 2008
R`000 R`000 R`000
BALANCE SHEETS
ASSETS
Non current assets 157 939 74 070 146 719
Fixed assets 13 293 8 949 13 547
Financial receivables 22 458 28 139 22 093
Goodwill on acquisition of 122 188 36 982 111 079
subsidiaries
Current assets 971 419 178 218 554 840
Financial receivables net of 919 273 127 755 501 987
provisions
Financial receivables (ST) 960 772 135 944 527 833
Financial receivables (41 499) (8 189) (25 846)
impairment provision
Trade and other receivables 3 140 10 417 1 627
Cash and cash equivalents 49 006 40 046 51 226
Total assets 1 129 358 252 288 701 559
EQUITY AND LIABILITIES
Shareholders Equity 488 932 212 031 290 001
Share capital and premium 268 940 158 300 158 302
Accumulated profit 219 992 53 731 131 699
Non current liabilities 585 847 19 724 365 625
Borrowings 584 631 18 804 364 594
Lease liability 1 216 920 1 031
Current liabilities 54 577 20 533 45 933
Borrowings (ST) 15 512 3 540 19 013
Trade and other payables 2 437 4 181 3 840
Taxation 36 628 12 812 23 080
Total equity and liabilities 1 129 358 252 288 701 559
Net asset value per share 219,33 106,09 145,11
(cents)
Net tangible asset value per 183,13 87,59 89,53
share (cents)
Number of shares in issue 222 926 199 851 199 851
(`000)
Reviewed Reviewed Audited
INCOME STATEMENTS 31 Aug 31 Aug 28 Feb
2008 2007 2008
R`000 R`000 R`000
Revenue 307 178 59 639 258 785
Operating expenses (96 128) (13 691) (55,430)
Cost of funding (94 400) (9 243) (75 014)
Profit before finance costs and 116 650 36 705 128 341
depreciation
Finance costs - (48) -
Depreciation and amortisation ( 542) (224) (810)
Profit before taxation 116 108 36 433 127 531
Taxation (27 816) (11 129) (24 259)
Net profit for the period 88 292 25 304 103 272
Headline earnings 88 292 25 304 103 272
Basic and diluted earnings per 15,6 57,0
share (cents) 43,0
Weighted average number of shares 205 364 162 508 181 179
(`000)
Headline earnings per share 15,6 57,0
(cents) 43,0
Reviewed Reviewed Audited
CASH FLOW STATEMENTS 31 Aug 31 Aug 28 Feb
2008 2007 2008
R`000 R`000 R`000
Cash flows from operating activities 85 919 27 415 119 342
Cash flows from investing activities (10 1 945 (24 653)
531)
Cash flows from financing activities (77 608) 5 719 (48 430)
Net movement in cash and cash (2 35 079 46 259
equivalents 220)
Cash and cash equivalents at 51 226 4 967 4 967
beginning of year
Cash and cash equivalents at end of 49 006 40 046 51 226
period
STATEMENT OF CHANGES IN Share Share Acc
EQUITY Capital Premium Profit Total
R`000 R`000 R`000 R`000
Balance as at 28 February 1 460 72 801 28 427 102 688
2007
Net profit for the period - - 103 272 103 272
Issue of share capital 537 83 504 - 84 041
Balance as at 28 February 1 997 156 305 131 699 290 001
2008
Net profit for the period - - 88 293 88 293
Issue of share capital 231 110 407 - 110 638
Balance as at 31 August 2 228 266 712 219 992 488 932
2008
COMMENTS
The Board of Directors are pleased to present the reviewed interim financial
results of the Group for the six months ended 31 August 2008.
NATURE OF THE BUSINESS
African Dawn is a specialist finance group focusing on the operational areas as
listed below. It provides these services to LSM 3 - 10 income groups, enabling
these clients to manage their own finances, enter the mainstream banking
fraternity, become property owners and/or add value to their existing
properties.
A Short term secured financing (Bridging financing)
B Home improvement financing
C Support services
A. Short term secured financing
This division provides
* Property transfer funding to individuals
* Medical aid claim discounting for medical practitioners
* Bridging finance for affordable housing developers
The terms of these loans are between 1 to 14 months. All loans are secured by
tangible security (mostly fixed property) at an average of 2,25 times the loan
value.
B Home improvement financing
This division provides mainly home improvement and consumer finance to a
selected client bases representing households earning between R4,000 and R12,000
per month. To mitigate risk, African Dawn makes payment directly to the
retailers or approved suppliers. There is a strong emphasis on annuity income
and the tenure of loans is on average 22 months.
C Support services
This division provides
* Financial Services Board approved consumer education to predominantly low
literacy, previously unbanked consumers
* Cellphone banking solutions
* Marketing of properties via Pam Golding franchised estate agencies, mainly
in Attridgeville, Mamelodi and Pretoria North areas.
FINANCIAL REVIEW
Earnings and headline earnings increased by 248% to R88,2 million (2007: R25,3
million) for the six months ended 31 August 2008.
This was driven by an increase in net financial receivables to R941 million as
at 31 August 2008, compared to R523 million as at 29 February 2008. This
represented an increase of R418 million. As a result, borrowings increased by
R216 million. The increased access to borrowings was facilitated by the
additional capital raised. Furthermore, a R160 million secured finance fund is
managed on behalf of a client.
Cost of funding decreased from 29% to 25,87% as a result of raising additional
funding at reduced rates specifically in the consumer finance division.
Management are committed to reducing overall funding costs which will enhance
future earnings.
The group continued to maintain prudent impairment provisioning, at a ratio of
4,5% of total financial receivables. Actual bad debts written off amounted to
1,3% of total financial receivables.
Goodwill increased as a result of an issue of 3 million shares at R4,11 to the
vendors of CIA Holdings Limited ("Allegro"), following their performance
undertakings being achieved for the financial year end 29 February 2008.
SHARE CAPITAL
Share capital and premium increased as a result of the issue of 20 million new
shares for cash in July 2008 at R4,90 per share, as well as the 3 million shares
at R4,11 issued to Allegro vendors as referred to above.
SEGMENTAL REPORTING
Bridging Consumer
Total Finance Finance Other
Revenue 307 178 271 088 30 295 5 795
Net profit for the period 88 292 77 614 10 464 214
Net Asset Value 488 932 438 425 41 885 8 622
PROSPECTS
Current economic conditions, while of general concern, do not negatively impact
the business. An analysis of the size of the potential market seen with the
existing penetration by the industry, supports our assessment of the group`s
growth opportunities. The loan to security value ratio in the short term
secured finance division ensures that we are adequately protected against
potential impairments. Deal flow continues to grow with the number of
applications received having increased by more than 100%, with 45% of such
applications being approved.
In the consumer finance division, bad debts are not expected to increase, as the
introduction of the NCA continues to result in the elimination of higher risk
clients. Approval rates in this division amount to 62% where more applications
of an improved quality are received. The group is also very prudently provided
for in this division.
The group is less exposed than conventional lenders, who rely on short term
liquidity, to the liquidity risk that has caused such upheaval in financial
markets in recent times as our funding structures are longer term in nature and
appropriately matched to our assets.
The acquisition of Limosa Business Finance (Pty) Ltd, as announced to
shareholders on SENS on 23 June 2008, will only reflect during the second half
of the financial year. This acquisition will result in growth in specifically
the property transfer funding market which represents high value, low risk
transactions and repetitive deal flow.
COMPANIES ACT REQUIREMENTS
The reviewed interim financial statements were prepared in compliance with the
Companies Act and IFRS and IAS 34 Interim Financial Reporting.
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of compliance
The interim results comprise a consolidated balance sheet at 31 August 2008, a
consolidated income statement, consolidated statement of changes in equity and
summarised consolidated cash flow statement for the period ended 31 August 2008.
The interim results have been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards ("IFRS") and
the presentation and disclosure requirements of IAS34, Interim Financial
reporting, JSE Listings Requirements and South African Companies Act.
The accounting policies applied for the period are consistent with those of the
prior year.
The interim results were approved by the Board of Directors on 22 September
2008.
Basis of measurement
The condensed financial statements have been prepared on the historical cost
basis.
CORPORATE GOVERNANCE
The Group subscribes to the principles of, and implements where appropriate, the
recommendations of the King II Code on Corporate Governance.
DIVIDENDS
Due to the continued high growth in operations, and return on equity achieved,
the Board are not currently considering a declaration of dividends. This policy,
in the context of the continued drive to introduce more cost effective gearing,
is reviewed annually.
REVIEW OPINION
The results have been reviewed by Van Dyk and Associates Inc. The unqualified
review report is available for inspection at the company`s registered office.
For and on behalf of the Board
JM VAN TONDER CM VAN NIEUWKERK
Chief Executive Officer Chief Financial Officer
23 September 2008
CORPORATE INFORMATION
Non executive directors: LI Mophatlane (Chairman), SW
de Bruyn, C de W Vivier
Executive directors: JM van Tonder (CEO), CM van Nieuwkerk (FD), MN
Ramasehla, CJ Odams
Registration number: 1998/020520/06
Registered address: 1st Floor, Dunkeld Place, 12 North Road, Dunkeld West,
2196
Postal address: PO Box 61051, Marshalltown, 2107
Company secretary: CM van Nieuwkerk
Telephone: (011) 341 0860
Facsimile: (011) 788 7271
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Auditors: Van Dyk & Associates
Designated Adviser: Vunani Corporate Finance
Date: 23/09/2008 16:43:01 Produced by the JSE SENS Department.
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