| Tue 9 Nov 2010, 16:00 | | ADW - African Dawn Capital Limited - Reviewed Condensed Interim Financial |
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ADW
ADW
ADW - African Dawn Capital Limited - Reviewed Condensed Interim Financial
Results for six months ended 31 August 2010 and further Cautionary Announcement
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"
Reviewed Condensed Consolidated Statements of Financial Position for the six
months ended 31 August 2010 and further Cautionary Announcement
Six months Six months Year ended
ended ended
31-Aug-10 31-Aug-09 28-Feb-10
R`000 R`000 R`000
(Reviewed) (Restated (Audited)
Reviewed)
Non-current assets 2,605 54,834 5,859
Property, plant and equipment 2,605 23,089 5,859
Goodwill - 30,749 -
Deferred tax - 996 -
Current assets 134,692 197,381 125,344
Inventories 2,068 523 6,997
Property in possession 34,965 - -
Current tax receivable 6,961 - 6,961
Trade and other receivables 294,506 332,071 322,070
Impairment on trade receivables (211,747) (144,710) (226,582)
Net trade and other receivables 82,759 187,361 95,488
Cash and cash equivalents 7,939 9,497 15,898
Non-current assets held for sale 13,749 - 12,429
Total assets 151,046 252,215 143,632
Capital and reserves 13,313 122,257 23,673
Share capital 256,107 242,015 256,107
Reserves 452 - 452
Accumulated (loss) (244,771) (121,215) (234,265)
Non-controlling interest 1,525 1,457 1,379
Non-current liabilities 28,604 73,703 32,246
Borrowings 27,911 71,920 30,460
Finance lease obligation 117 1,783 1,210
Deferred tax 576 - 576
Current liabilities 109,129 56,255 87,713
Finance lease obligation 52 - 956
Borrowings 45,554 7,303 39,287
Current tax payable 17,702 28,588 17,995
Trade and other payables 28,990 20,364 12,732
Provisions 16,000 - 16,000
Bank overdraft 831 - 743
Total liabilities 137,733 129,958 119,959
Total equity and liabilities 151,046 252,215 143,632
Ordinary shares in issue (`000) 222,926 217,032 222,926
Net asset value per share (cents) 5.97 55.58 10.62
Net tangible asset value per share 5.97 41.43 10.62
Condensed Consolidated Statements of Comprehensive Income for the six months
ended 31 August 2010
Six months Six months Year ended
ended ended
31-Aug-10 31-Aug-09 28-Feb-10
R`000 R`000 R`000
(Reviewed) (Restated (Audited)
Reviewed)
Revenue 23,142 76,848 105,336
Cost of sales (1,213) - (1,919)
Gross profit 21,929 76,848 103,417
Other income 1,017 1,529 1,905
Operating and other expenses (21,190) (201,491) (254,643)
Operating profit/(loss) 1,756 (123,114) (149,321)
Investment revenue 144 - 72
Fair value adjustment (9,906) (165,976) (139,192)
Finance cost (2,347) - (10,877)
(Loss) before taxation (10,353) (289,090) (299,318)
Taxation (7) 200 (7,179)
(Loss) for the period (10,360) (288,890) (306,497)
Other comprehensive income:
Loss on property revaluation - - (4,000)
Taxation related to components of other
Comprehensive income - - (1,063)
Other comprehensive loss for the year net
of taxation - - (5,063)
Total comprehensive (loss) (10,360) (288,900) (311,560)
Attributable to
Owners of the parent (10,506) (288,890) (311,560)
Non-controlling interest 146 (10) -
Number of shares 222,926 211,020 219,830
Basic (loss) per share (4.71) (136.91) (139.42)
Diluted (loss) per share (4.71) (136.91) (139.42)
Headline (loss) per share (4.71) (53.53) (49.28)
Reconciliation of headline (loss)
Basic (loss) (10,360) (288,900) (306,497)
Non-recurring adjustments
Impairment of subsidiaries` NAV
and related goodwill - 165,976 198,155
Loss on disposal of treasury shares - 9,969 -
Headline (loss) (10,360) (112,955) (108,342)
Condensed Consolidated Statements of Changes in Equity for the six months
ended 31 August 2010
Share Share Reserves Retained Minority Ordinary
Capital Premium Earnings Interest Share
Holders
Equity
Balance at 28 Feb 2009 2,169 242,444 5,515 72,232 (5,755)316,605
Total comprehensive income
for the 2010 year - - (5,063)(306,497) -(311,560)
Purchase of own/treasury
Shares (1) (1,143) - - - (1,144)
Treasury shares issued to
Allegro shareholders 53 12,585 - - - 12,638
Subsidiary acquired 1,379 1,379
Deconsolidation of Allegro
Holdings (Pty) Ltd - - - - 5,755 5,755
Balance at 28 Feb 2010 2,221 253,886 452 (234,265) 1,379 23,673
Total comprehensive income
for the six months - - - (10,506) 146 (10,360)
Balance at 31 Aug 2010 2,221 253,886 452 (244,771) 1,525 13,313
Condensed Consolidated Statements of Cash Flows for the six months
ended 31 August 2010
Six months Six months Year ended
ended ended
31-Aug-10 31-Aug-09 28-Feb-10
R`000 R`000 R`000
(Reviewed) (Restated (Audited)
Reviewed)
Cash flow from operating activities (10,890) (6,808) (34,710)
Cash flow from investing activities 1,411 (8,081) 20,657
Cash flow from financing activities 1,432 (3,586) 5,325
Net cash flow for period (8,047) (18,475) (8,728)
Cash and cash equivalents at
beginning of period 15,155 27,972 23,883
Cash and cash equivalents at
end of period 7,108 9,497 15,155
Basis of preparation
The reviewed condensed interim financial statements are prepared in South
African Rands thousands (`000) on the historical-cost basis, except for certain
assets and liabilities which are carried at amortised cost, and derivative
financial instruments which are stated at their fair value. The financial
statements have been prepared in accordance with the framework concepts and
measurement and recognition requirements of International Financial Reporting
Standards (IFRS), IAS 34 as well as the AC 500 standards as issued by the
Accounting Practices Board, the requirements of the South African Companies Act,
1973, as amended, and the JSE Listings Requirements. The preparation of
financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Company`s accounting policies.
Review opinion
Grant Thornton has reviewed the condensed interim results for the six months
ended 31 August 2010 and their modified opinion with an emphasis of matter is
available for inspection at the Company`s registered office. The emphasis of
matter has been expressed on the accompanying financial information as follows:
"Conclusion:
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying financial information is not prepared, in all material
respects in accordance with the International Accounting Standard applicable to
interim financial reporting and in the manner required by the Companies Act of
South Africa.
Emphasis of matter:
Without qualifying our opinion we draw attention to the existence of a material
uncertainty. This material uncertainty refers to the settlement of the National
Housing Corporation Limited debt that may cast significant doubt on the Group`s
ability to continue as a going concern and therefore to realise its assets and
discharge its liabilities in the normal course of business."
Notes to the reviewed condensed consolidated financial statement
1. Reporting entity:
African Dawn Capital Limited is a Company domiciled in the Republic of South
Africa. The condensed consolidated financial statements of the Company
for the six months ended 31 August 2010 comprise the Company and its
subsidiaries and the Group`s interests in associates and jointly controlled
entities.
2. Statement of compliance:
The reviewed consolidated interim financial information for the six months ended
31 August 2010, has been prepared in accordance with International Financial
Reporting Standards (IFRS), the interpretations adopted by the International
Accounting Standards Board (IASB), and the requirements of the South African
Companies Act. These condensed interim financial statements are presented in
compliance with IAS 34 - Interim Financial Reporting as well as AC 500
standards, and should be read in conjunction with the annual financial
statements for the year ended 28 February 2010. The reviewed results were
approved by the Board on 27 October 2010.
3. Significant accounting policies:
The accounting policies adopted in the preparation of the condensed interim
financial information are consistent with those of the annual financial
statements for the year ended 28 February 2010. For a full list of standards and
interpretations which have been adopted we refer you to the 28 February 2010
annual financial statements. Below is an extract of the most significant
accounting policies of the Group.
Revenue recognition: Revenue recognition comprises the fair value of the sale of
goods and services, net of value-added tax, rebates and discounts. Revenue is
recognised as follows. Sale of services: Sales of services are recognised in the
accounting period in which the services are rendered, by way of reference to
completion of the specific transaction assessed on the basis of the actual
services provided as portion of the total services to be provided.
Interest income: Interest income is recognised on a time-proportion basis using
the effective interest method. When a receivable is impaired, the Group reduces
the carrying amount to its recoverable amount - being the estimated future cash
flow discounted at the original effective interest rate of the instrument and
continues unwinding the discounts as interest income. Interest income on
impaired loans is recognised either as cash is collected or on a cost-recovery
basis as conditions warrant.
Impairment of assets: Assets that have an indefinite useful life are not subject
to amortisation and are tested annually for impairment. Assets that are subject
to amortisation or depreciation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the
amount by which the asset`s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset`s fair value less cost to sell and
value in use. For the purpose of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash
generating units).
Property in possession: Repossessed properties acquired in exchange for loans as
part of an orderly realisation are reported in Property in possession under the
inventory assets class, as it is held for sale in the ordinary course of
business. The repossessed properties are recognised when the risks and rewards
of the properties have been transferred to the Group. The corresponding loans
are derecognised when the Group becomes the owner of the property. The property
acquired is initially recorded at cost which is the lower of its fair value
(less costs to sell) and the carrying amount of the loan (net of impairment) at
the date of transferring ownership. It is subsequently measured at the lower of
the carrying amount and its net realisable value. No depreciation is charged in
respect of these properties. Any subsequent write-down of the acquired property
to net realisable value is recognised in the statement of comprehensive income,
in impairments. Any subsequent increase in the net realisable value, to the
extent that it does not exceed the cumulative write-down, is also recognised in
impairments. Gains or losses on disposal of repossessed properties are reported
in Other operating income or Operating expenditure.
4. 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 condensed 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 to
the consolidated financial statements for the six months ended 31 August 2009
and year ended 28 February 2010. During the six months ended 31 August 2010
management reassessed its estimates in respect of: the recoverable amount of
investments in subsidiary; the recoverable amount of trade and other receivables
in conjunction with current economic climate and deferred tax assets.
5. Impairments of trade and other receivables
The majority of the impairment of trade receivables is based on underlying
security value at the time of reporting. The security values were reassessed at
31 August 2010 and provisions were adjusted accordingly.
Impairment
31-Aug-10 31-Aug-09 28-Feb-10
R`000 R`000 R`000
Movement in impairment provision (636) 135,062 95,140
6. Non current assets held for sale
The head office building was placed on the market prior to 28 February 2010 year
end and is still in the process of being transferred to the buyer. In addition
to the head office building, a decision was taken in August 2010 to sell a fixed
property belonging to a subsidiary and is now classified as non current asset
held for sale.
7. Property in possession
The Company perfected its security over a property in order to protect its
capital advances in terms of its loan, by taking transfer of ownership. The
development on the property needs to be finalised in order for the Group to
recover its capital. The property is now deemed as property in possession,
pending realisation of the above mentioned process.
8. Segmental information
Figures in ZAR thousands
31 Aug 2010 Bridging Personal & Other Total
Finance Short Term
Revenue 444 17,197 5,501 23,142
Net profit/(loss) 2,954 (2,149) (11,165) (10,360)
Net asset value 44,306 (17,318) (13,675) 13,313
31 Aug 2009 Bridging Personal & Other Total
Finance Short Term
Revenue 36,628 31,761 8,459 76,848
Net (loss) (275,597) (9,976) (3,327)(288,900)
Net asset value 130,963 (5,895) (2,811) 122,257
Other Notes
1. Corporate governance
The Directors and senior management of the Group endorse the Code of Corporate
Practices and Conduct as set out in the King II report on Corporate Governance.
Having regard for the size of the Group, the Board is of the opinion that the
Group complies with the Code as well as with the Listings Requirements of the
JSE Limited in all material respects. The Group performs regular reviews of its
corporate governance policies and practices and strives for continuous
improvement in this regard. The Group is currently assessing the impact of King
III and the new Companies Act.
2. Human resources
Ongoing skills and equity activities continue to ensure compliance with current
legislation. Plans continue in terms of initiatives embarked upon that
contribute to broader skills development and sourcing appropriately qualified
staff on an ongoing basis.
3. Related party transactions
The Group did not enter into any related party transactions during the period.
4. Dividend
In line with losses incurred, the Company will not pay a dividend for the 2011
financial year.
COMMENTS FROM THE BOARD
1. Outlook
Economic
Trading conditions continue to be challenging in the Group`s various markets.
Nationally, individual credit remains far too high and whilst the NCA has
curtailed credit extension, the achievement of sustainable individual debt
exposure is some way away. The property market is showing signs of recovery
however this is a slow process. A declining interest rate market is helpful
however the levels of distressed debt in both the corporate and personal
markets, compounded by a legacy of low savings must be a concern at National
level.
Afdawn specific strategy and National Housing Corporation Limited ("NHFC")
The Group is in the process of redefining its strategy following a period of
instability brought about through inappropriate corporate actions and market
changes. Going forward, the focus will be on increasing shareholder value.
Specific attention is being given to establishing market credibility. There are
a number of short term strategic Board initiatives, the resolution of which will
impact on the future wellbeing of the Group. In particular, we are in advanced
negotiations with the NHFC regarding their funding exposure to the Group. We are
also in discussions with various parties regarding the raising of additional
funding for the Group.
2. Changes to the Board of Directors
The composition of the Board and its sub-committees changed between 28 February
2010 and 31 August 2010. Mr A Potgieter resigned on 7 May 2010 as independent
non-executive director. Mr RR Emslie resigned as independent non-executive
director and chairman on 22 July 2010. Mr PC Gordon and Ms L Taylor were
appointed on the same day as executive chairman and independent non-executive
director respectively. Mr TF Kruger was appointed 2 August 2010 as Financial
Director. Mr M Patel and Mr S de Bruyn resigned as non-executive directors on 1
November 2010.
3. Change of Designated Advisor
The Designated Advisor, Vunani Corporate Finance was removed from office on 20
September 2010. They were replaced on 23 September 2010 by Sasfin Capital, a
division of Sasfin Bank Limited.
4. SARS
We have completed our initial findings on the accurate tax position and have
held productive meetings with SARS regarding the reassessment of prior years`
tax liabilities, following the restatement of the prior years` results. An
action plan was concluded with SARS to resolve all the outstanding matters.
5. Going concern
The Group has access to funds to ensure its continued trading beyond the current
financial year. However, as limited new business has been transacted since the
removal of the Executive Board in October 2009, it is important that the Group
raise additional capital. This is not feasible until resolution is reached with
the NHFC regarding the Group`s outstanding obligations to this organisation. As
mentioned previously, discussions are well advanced and we expect a positive
outcome from these negotiations. Until settlement is reached with the NHFC,
there continues to be a material uncertainty relating to the settlement of this
creditor that may cast significant doubt on the Group`s ability to continue as a
going concern and therefore to realise its assets and discharge its liabilities
in the normal course of business.
6. Update on forensic investigations
As previously advised (refer to reported SENS: 1/12/2009 and SENS: 29/06/2010),
the Board called for a forensic audit report. The report was made available to
the South African Police Services and appropriate regulatory authorities. We
continue to work with the authorities regarding their investigations.
Shareholders will be informed on developments relating to this matter.
7. Further Cautionary Announcement
Shareholders are referred to the Cautionary Announcement released on 3 November
2010. In this announcement shareholders were advised that the Company was still
in discussions with various parties regarding the raising of additional funding
for the Group. As these discussions are still ongoing, shareholders are advised
to continue exercising caution when dealing in the Company`s securities until a
further announcement is made with regard to this matter.
Administration
African Dawn Capital Limited
("African Dawn" or "the Company" or "the Group")
Registration number: 1998/020520/06
(Incorporated in the Republic of South Africa)
JSE share code: ADW ISIN code: ZAE000060703
Registered office: 1 st Floor, Dunkeld Place, 12 North Road, Dunkeld West,
Johannesburg, Republic of South Africa
Tel: +27 (11) 341 0860 Fax: +27 (11) 325 2716
Directors: PC Gordon (executive chairman), TF Kruger (financial director), SW de
Bruyn (non-executive)(resigned 1 November 2010), MM Patel (independent non-
executive)(resigned 1 November 2010), CF Wiese (independent non-executive), L
Taylor (independent non-executive)
Company secretary: LW Viljoen
Auditors: Grant Thornton
Designated Advisor: Sasfin Capital, a division of Sasfin Bank Limited
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
Date: 9 November 2010
Date: 09/11/2010 16:00:01 Produced by the JSE SENS Department.
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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.
