| Thu 14 May 2009, 15:58 | | ADW - African Dawn - Condensed Audited Financial Results for the Year Ended |
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ADW
ADW
ADW - African Dawn - Condensed Audited Financial Results for the Year Ended
28 February 2009
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")
CONDENSED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009
HIGHLIGHTS:
- Headline earnings per share up 54%
- Headline earnings up 82%
- Net asset value per share up 76%
- Revenue up 87%
- Profit before tax up 103%
Condensed Group Balance Sheet
Audited Audited
28 February 29 February 2008
2009
R`000 R`000
ASSETS
Non-current assets 243 798 153 928
Property, plant and equipment 49 415 13 547
Goodwill on acquisition of 188 271 140 381
subsidiaries
Deferred tax asset 6 112 -
Current assets 792 252 319 217
Trade and other financial 592 594 267 092
receivables
Inventories 171 685 899
Cash and cash equivalents 27 973 51 226
Total assets 1 036 050 473 145
EQUITY AND LIABILITIES
Shareholders` funds 554 865 290 001
Share capital and premium 244 613 158 302
Retained income 316 007 131 699
Minority shareholders interest (5 755) 0
Non-current liabilities 255 008 40 238
Borrowings 253 888 39 207
Lease liability 1 120 1 031
Current liabilities 226 177 142 906
Trade and other payables 127 083 100 813
Taxation 80 285 23 080
Borrowings - short term 18 809 19 013
portion
Total equity and liabilities 1 036 050 473 145
Net asset value per share 255.65 145.11
(cents)
Net tangible asset value per 168.91 74.87
share (cents)
Number of shares in issue 217 039 199 851
(`000)
Condensed Group Income Statement
Audited Audited
28 February February 2008
2009
R`000 R`000
Revenue 443 953 238 019
Other income 21 816 -
Operating expenses (152 468) (55 430)
Cost of funding (75 188) (54 248)
Profit before depreciation 238 113 128 341
Depreciation (1 813) (810)
Profit before taxation 236 300 127 531
Taxation (71 171) (24 259)
Net profit for the period 165 129 103 272
Net profit for the period 165 129 103 272
Minority losses 22 451 -
Basic and Headline earnings 187 580 103 272
Basic and headline earnings per 87.9 57.0
share (cents)
Weighted average number of shares 213 194 181 179
for basic and headline earnings
(`000)
Diluted basic and headline 85.5 57.0
earnings per share (cents)
Weighted average number of shares
for diluted basic and headline 219 343 181 179
earnings (`000)
Condensed Group Cash Flow Statement
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
Cash flows from operating (79 883) 119 342
activities
Cash flows from investing (29 681) (24 653)
activities
Cash flows from financing 86 311 (48 430)
activities
Net movement in cash and cash (23 253) 46 259
equivalents
Cash and cash equivalents at 51 226 4 967
beginning of period
Cash and cash equivalents at end 27 973 51 226
of period
Condensed Group Statement of Changes in Equity
Share Share Retained Minority Total
capital premium income interest R`000
R`000 R`000 R`000 R`000
Balance 28 918 29 010 876 - 30 804
February 2006
Net profit for the - - - - -
period
Issue of share 542 43 791 27 551 - 71 884
capital
Balance 28 1 460 72 801 28 427 - 102 688
February 2007
Net profit for the - - 103 272 - 103 272
period
Issue of share 537 83 504 - - 84 041
capital
Balance 29 1 997 156 305 131 699 - 290 001
February 2008
Issue of share 231 110 407 - - 110 638
capital
Treasury shares (58) (24 269) - - (24 327)
repurchased
Net profit for the - - 187 573 (22 451) 165 122
period
Business - - (3 265) 16 696 13 431
combinations
Balance 28 2 170 242 443 316 007 (5 755) 554 865
February 2009
Segmental Reporting
Total Secured Unsecured
R`000 finance finance Other
R`000 R`000 R`000
Revenue 443 953 352 945 86 156 4 852
Net profit for 187 580 147 239 38 238 2 103
the period
Shareholders` 554 865 469 982 76 481 8 402
funds
OVERVIEW
The board of directors of African Dawn is pleased to present the audited
financial results of the group for the year ended 28 February 2009.
NATURE OF THE BUSINESS
African Dawn is a specialist financial services group focusing on the
following areas of operation:
Secured Finance
Secured finance encompasses:
- Bridging and structured finance to statutory entities, individuals and
developers of low-cost ("RDP") and affordable housing;
- Equity property finance and participation;
- Mezzanine finance: and
- Advisory services to property developers.
Current macro economic conditions led to increased demand in the services
offered by this division. This increased demand has translated into both
higher sales growth and improved credit quality.
Unsecured Finance
This division provides home improvement finance and personal loans to
households earning between R1 000 and R15 000 per month. Interest rates at
which loans are extended are regulated by the National Credit Act "NCA". The
elimination of smaller non-compliant participants continues to have a
positive impact on the growth within this division. African Dawn applies a
comprehensive credit scoring system and in the case of home improvements
makes payment directly to the retailers or approved suppliers.
The effect of the NCA continues to ensure improved quality of transactions.
There is a strong emphasis on annuity income.
Other - Financial Literacy Education
This business provides Financial Services Board approved consumer education,
to predominantly low income, financially illiterate consumers.
BUSINESS COMBINATIONS
Between August 2007 and February 2008 African Dawn acquired 100% of the
issued share capital of Elite Group (Pty) Limited ("Elite"), CIA Holdings
Limited ("Allegro") and Dumont Healthcare (Pty) Limited ("Dumont"). During
the year under review, management continued to integrate these acquisitions.
The remaining 6.1 million shares to be issued to the vendors of Allegro in
the 2010 financial year were taken into account in calculating the fully
diluted earnings per share.
Goodwill increased by R47.9 as a result of payments due to vendors in respect
of the acquisitions concluded in the previous financial year.
FINANCIAL REVIEW
Headline earnings increased by 82% to R187.6 million which was mostly derived
from growth in secured financing.
The Group increased annual profits before tax by more than 100%. Profits were
fully taxed for the first time in the current financial year.
Management continue to diversify the group`s funding base on terms that have
resulted in the weighted average cost of funding decreasing to 17.3% from
25.5% in the previous year.
African Dawn has secured additional funding of R100m at prime linked rates,
which should further lower the group`s cost of funding in the year ahead.
Bad debts written off for the year increased to approximately 4.5% compared
to bad debts written off of 1% in the prior year. An additional impairment
provision of 4.5% of total financial receivables has been raised.
Property, plant and equipment increased by R35.9m mainly as a result of the
acquisition of the property where head office operations are conducted, as
well as assets acquired in terms of equity transactions within Allegro.
Financial receivables increased from R267 million at 29 February 2008 to
R592.6 million at 28 February 2009. This was due to improved deal flow and
this growth was funded by a corresponding increase in short and long term
borrowings of R215 million as well as additional capital raised via a share
placement.
Inventories of R172m relate to equity investments in affordable housing
developments by Allegro. These properties are reflected as inventories as
they will be sold within the next financial year. Significant pre-sales have
already been concluded. The effect on the group cash flow statements is that
the increase in inventories reflects as a cash outflow at 28 February 2009,
with cash inflows expected to take place during the following 12 months.
Minority shareholders` interest refers to minority interests in various
subsidiaries within Allegro Holdings, a subsidiary of African Dawn.
CASH FLOW STATEMENTS
The operating cash can be analysed as follows:
2009
R`000
Cash inflow from unsecured and secured financing 91 802
operating activities
Less: Increase in Allegro inventory (land) (171 685)
Cash outflow from operating activities as per
face of the cash flow statement (79 883)
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 3 million
shares at R4.11 which were issued to the vendors of Allegro, following their
performance undertakings being achieved for the financial year end 29
February 2008. The payments due in May 2009 and May 2010 have been provided
for in payables and equity.
The fully diluted earnings per share takes into account the pen-ultimate and
final payments of shares to Allegro vendors of 6.11 million shares at R2.00
per share.
Treasury shares were purchased amounting to 5.9 million shares at an average
price of R4.06 per share.
POST BALANCE SHEET EVENTS
The management of African Dawn Capital Limited recently became aware that an
order had been granted in the North Gauteng High Court in terms of which the
CMM Cash Management Fund portfolio and the financial services business of
Corporate Money Managers (Pty) Ltd ("CMM") were placed under provisional
curatorship.
Included in the CMM group companies was Miro Capital (Pty) Ltd ("Miro"),
which is an associate company of Allegro Holdings (Pty) Ltd. A subsidiary of
Allegro, Allegro Bridging (Pty) Ltd, entered into agreements with Miro in
terms of which the former acted as an originator of trade receivables
consisting primarily of bridging finance for property developments which were
acquired by a rated securitisation conduit established by CMM.
Allegro, as the originator, continues to earn fees for the administration and
collection of the underlying trade receivables. The trade receivables
acquired by the CMM group do not form part of the assets of Allegro.
The management of Allegro is assisting the curators of CMM to form a clearer
understanding of the underlying transactions acquired by the CMM group.
PROSPECTS
Current economic conditions, while of general concern, have not had a
detrimental impact on the growth in the business. The loan to security ratio
in the short term secured finance division continues to ensure that the group
is adequately protected against potential impairment. Deal flow, especially
in the home improvement division, continues to grow with the number of
applications received having increased by more than 100%, with 45% of such
applications being approved.
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of compliance
The condensed financial statements comprise a consolidated balance sheet at
28 February 2009, a consolidated income statement, consolidated statement of
changes in equity and summarised consolidated cash flow statement for the
year ended 28 February 2009. The condensed financial statements have been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRS"), the presentation and
disclosure requirements of IAS34 : Interim Financial Reporting, the JSE
Listings Requirements and South African Companies Act.
The accounting policies applied for the year are consistent with those of the
prior year.
Basis of measurement
The condensed financial statements have been prepared on the historical cost
basis.
AUDIT OPINION
The annual financial statements have been audited by SAB&T Incorporated. The
auditors` unqualified audit report is available for inspection at the
company`s registered office.
CORPORATE GOVERNANCE
The group subscribes to the principles of, and implements where appropriate,
the recommendations of the King II Code on Corporate Governance.
DIVIDENDS
The group will continue with its policy to retain and utilise cash generated
within the business. The Board will consider the declaration of dividends, in
the context of continued growth rates and returns on equity and once the cost
of funding has been reduced satisfactorily. Significant progress has been
made in this endeavour, as is illustrated by the reduced cost of funding.
STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going-concern basis since
the directors have every reason to believe that the company has adequate
resources in place to continue in operation for the foreseeable future.
For and on behalf of the Board
JM van Tonder CM van Nieuwkerk
Chief Executive Officer Chief Financial Officer
14 May 2009
CORPORATE INFORMATION
Non executive directors: LI Mophatlane (Chairman), SW de Bruyn,
MM Patel, M Ferreira
Executive directors: JM van Tonder (CEO), CM van Nieuwkerk (CFO),
C de W Vivier (COO),
MN Ramasehla (Deputy CEO)
Registration number: 1998/020520/06
Registered address: 1st Floor, Dunkeld Place, 12 North Road,
Dunkeld West, 2196
Postal address: PO Box 411741, Craighall, 2024
Company secretary: CM van Nieuwkerk
Telephone: (011) 341 0860
Facsimile: (011) 788 7271
Transfer secretaries: Computershare Investor Services (Pty)
Limited
Auditors: SAB&T Incorporated
Designated Adviser: Vunani Corporate Finance
Date: 14/05/2009 15:58:35 Produced by the JSE SENS Department.
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