| Mon 17 Oct 2011, 15:30 | | ADW - African Dawn Capital Limited - Unaudited condensed interim financial |
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ADW
ADW
ADW - African Dawn Capital Limited - Unaudited condensed interim financial
results for six months ended 31 August 2011
AFRICAN DAWN CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/020520/06)
JSE code: ADW
ISIN: ZAE000060703
"the Company" or "the Group"
Unaudited Condensed Consolidated Statements of Financial Position for the six
months ended 31 August 2011
Six months Six months Year ended
ended ended
31-Aug-11 31-Aug-10 28-Feb-11
R`000 R`000 R`000
(Unaudited) (Reviewed) (Audited)
Non-current assets 2,556 2,605 3,000
Property, plant and equipment 1,844 2,605 2,288
Other financial assets 712 - 712
Current assets 114,920 134,692 124,241
Inventories - 2,068 -
Property in possession 25,304 34,965 25,344
Other financial assets 300 - 300
Current tax receivable 6,961 6,961 6,961
Trade and other receivables 269,882 294,506 284,146
Impairment on trade receivables (196,055) (211,747) (200,665)
Net trade and other receivables 73,827 82,759 83,481
Cash and cash equivalents 8,528 7,939 8,155
Non-current assets held for sale 1,013 13,749 1,200
Total assets 118,489 151,046 128,441
Capital and reserves 29,899 13,313 26,079
Share capital 256,107 256,107 256,107
Reserves 113 452 105
Accumulated (loss) (226,321) (244,771) (230,133)
Non-controlling interest - 1,525 -
Non-current liabilities 17,901 28,604 11,175
Borrowings 17,901 27,911 11,124
Finance lease obligation - 117 51
Deferred tax - 576 -
Current liabilities 70,689 109,129 91,187
Finance lease obligation 134 52 127
Borrowings 31,294 45,554 48,538
Current tax payable 18,166 17,702 18,045
Trade and other payables 10,008 28,990 11,716
Provisions 11,087 16,000 12,484
Bank overdraft - 831 277
Total liabilities 88,590 137,733 102,362
Total equity and liabilities 118,489 151,046 128,441
Ordinary shares in issue (`000) 222,926 222,926 222,926
Net asset value per share (cents) 13.41 5.97 11.69
Net tangible asset value per share 13.41 5.97 11.69
Condensed Consolidated Statements of Comprehensive Income for the six months
ended 31 August 2011
Six months Six months Year ended
ended ended
31-Aug-11 31-Aug-10 28-Feb-11
R`000 R`000 R`000
(Unaudited) (Reviewed) (Audited)
Revenue 19,136 23,142 48,235
Cost of sales (399) (1,213) (1,295)
Gross profit 18,737 21,929 46,940
Other income 10,339 1,017 8,603
Operating and other expenses (22,234) (21,190) (33,687)
Operating profit 6,842 1,756 21,856
Investment revenue 49 144 256
Fair value adjustment (187) (9,906) (10,522)
Finance cost (2,799) (2,347) (7,148)
Profit/(Loss) before taxation 3,905 (10,353) 4,442
Taxation (85) (7) (816)
Profit/(Loss) for the period 3,820 (10,360) 3,626
Other comprehensive income:
Taxation related to components of other
comprehensive income - - (452)
Other comprehensive loss for the year net
of taxation - - (452)
Total comprehensive income/(loss) 3,820 (10,360) 3,174
Attributable to
Owners of the parent 3,820 (10,506) 3,785
Non-controlling interest - 146 (611)
Number of shares 222,926 222,926 222,926
Basic profit/(loss) per share 1.71 (4.71) 1.63
Diluted profit/(loss) per share 1.71 (4.71) 1.63
Headline profit/(loss) per share 1.80 (4.71) 1.03
Reconciliation of headline earnings/(loss)
Basic profit/(loss) 3,820 (10,360) 3,626
Non-recurring adjustments
Sale of subsidiary - - (806)
Sale of property 3 - (515)
Impairment of non current
asset held for sale 187 - -
Headline earnings/(loss) 4,010 (10,360) 2,305
Condensed Consolidated Statements of Changes in Equity for the six months
ended 31 August 2011
Share Share Reserves+ Retained Minority Ordinary
Capital Premium Other NDR Earnings Interest Share-
holders
Equity
Balance at 28 Feb 2010 2,221 253,886 452 (234,265) 1,379 23,673
Total comprehensive income
for the year - - (452) 4,237 (611) 3,174
Transfer to insurance
reserves - - 105 (105) - -
Subsidiary sold - - - - (768) (768)
Balance at 28 Feb 2011 2,221 253,886 105 (230,133) - 26,079
Total comprehensive income
for the six months - - - 3,820 - 3,820
Transfer to insurance
reserves - - 8 (8) - -
Balance at 31 Aug 2011 2,221 253,886 113 (226,321) - 29,899
Consolidated Statements of Cash Flows for the six months
ended 31 August 2011
Six months Six months Year ended
ended ended
31-Aug-11 31-Aug-10 28-Feb-11
R`000 R`000 R`000
(Unaudited) (Reviewed) (Audited)
Cash inflow/(outflow) from
operating activities 5,851 (10,890) 2,591
Cash inflow/(outflow) from
investing activities (55) 1,411 2,987
Cash inflow/(outflow) from
financing activities (5,146) 1,432 (12,855)
Net cash inflow/(outflow) for period 650 (8,047) (7,277)
Cash and cash equivalents at
beginning of period 7,878 15,155 15,155
Cash and cash equivalents at
end of period 8,528 7,108 7,878
Basis of preparation
The unaudited 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 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.
The unaudited condensed interim financial information for the six-month
period ended 31 August 2011 has not been reviewed or reported on by the
Group`s auditors, Grant Thornton. Any reference to future financial
performance included in this announcement, has not been reviewed or reported
on by the Company`s auditors.
Notes to the unaudited condensed consolidated financial statements
1. Reporting entity:
African Dawn Capital Limited is a Company domiciled in the Republic of South
Africa. The unaudited condensed consolidated financial statements of the
Company for the six months ended 31 August 2011 comprise the Company and its
subsidiaries and the Group`s interests in associates and jointly controlled
entities.
2. Statement of compliance:
The unaudited consolidated interim financial information for the six months
ended 31 August 2011, 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 2011. The unaudited results were
approved by the Board on 22 September 2011.
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 2011. For a full list of standards
and interpretations which have been adopted we refer you to the 28 February
2011 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 when 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 they are held for sale in the ordinary
course of business. Repossessed properties are recognised when the risks and
rewards of the properties have been transferred to the Group. 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 2010 and year ended 28 February 2011. During
the six months ended 31 August 2011 management reassessed its estimates in
respect of the recoverable amount of investments in subsidiaries, the
recoverable amount of trade and other receivables (in conjunction with the
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 the
underlying security value at the time of reporting. The security values were
reassessed at 31 August 2011 and provisions were adjusted accordingly.
Impairment
31-Aug-11 31-Aug-10 28-Feb-11
R`000 R`000 R`000
Movement in impairment provision (4,610) (636) (25,917)
6. Property in possession
The Company perfected its security over properties in order to protect its
capital advances in terms of its loans, by taking transfer of ownership. The
properties will be developed, where it is considered economically viable, and
sold when favourable market conditions exist in order to realise the carrying
value thereof.
7. Segmental information
Figures in ZAR thousands
31 Aug 2011 Bridging Personal & Other Total
Finance Short Term
Revenue 830 13,387 4,919 19,136
Net profit/(loss) (5,837) 7,125 2,532 3,820
Net asset value (33,985) (9,122) 73,006 29,899
31 Aug 2010 Bridging Personal & Other Total
Finance Short Term
Revenue 347 17,197 5,598 23,142
Net profit/(loss) 7,730 (2,149) (15,941) (10,360)
Net asset value (24,540) (17,318) 55,171 13,313
COMMENTS FROM THE BOARD
Corporate Activity - Rights Offer, Convertible bonds and Special Purpose
Vehicle
It was announced on SENS on 14 June 2011 that the Company entered into a
Settlement agreement with the National Housing Finance Corporation Limited
("NHFC") on 30 May 2011 in respect of loans received from the NHFC. In terms
of the Settlement agreement, Afdawn agreed to pay the NHFC R28 million. The
first payment was due on 15 September 2011, or as soon thereafter as the
parties may agree. The remaining balance (the "Remaining Balance") of R5
million is to be settled firstly from any excess over R28 million received
from a planned "Rights Offer" and thereafter, should a balance remain unpaid,
by 31 October 2013. The Remaining Balance is interest free and is secured by
way of a cession over the book debts of Nexus Personnel Finance Proprietary
Limited ("Nexus"). In return and upon signing of the Settlement agreement,
the NHFC agreed to novate all current agreements between Afdawn, Nexus and
Elite. Due to unforeseen delays in finalising the Rights Offer documentation
with the JSE, the Company has agreed an extension with the NHFC for the
payment of the first amount to 15 November 2011.The Board further announced
that Afdawn planned to raise at least R25 million through the Rights Offer to
raise the required funds to fulfil the Company`s obligations in terms of the
Settlement agreement, as well as to settle the Company`s outstanding
liabilities with South African Revenue Services ("SARS") and the bank
overdraft with First National Bank.
In terms of the Rights Offer, 250 million Afdawn shares have been offered for
subscription to qualifying shareholders. Qualifying shareholders have
received rights (represented by letters of allocation) to subscribe for
112.145 Rights offer shares for every 100 Afdawn shares held on the Record
date (Friday 7 October 2011) for the Rights Offer, for a subscription price
of 10 cents per Rights Offer share. The Rights Offer share price represented
a premium of 1 cent (11%) to the closing share price of Afdawn of 9 cents on
13 June 2011.
In addition to the Rights offer, the Group has agreed to issue two
convertible bonds:
-Sandown Capital (Pty) Limited will subscribe for a three year convertible
bond of R10 million, to be issued by Elite Group (Pty) Limited ("Elite"),
which bond may be converted into Afdawn shares at the option of Sandown
Capital at any time within a three year period from the date on which the
cash from the issue of the Sandown Capital Bond is received at a price of 14
cents per Afdawn share; and
- PCI Fintrade (Pty) Limited ("PCI") will subscribe for a three year
convertible bond of R1,7 million to be issued by Afdawn, which may be
converted into Afdawn shares at the option of PCI at any time within a three
year period from the date on which the cash from the issue of the PCI Bond is
received at a price of 14 cents per Afdawn share.
Shareholders are referred to the SENS dated 14 June 2011, 10 August 2011 and
22 August 2011, addressing the details of the Rights Offer, Convertible bonds
and Special Purpose Vehicle. The Board is pleased to report that,
notwithstanding the unforeseen delays mentioned above, the process is on
track. All the required resolutions were passed at a General Meeting held on
21 September 2011, and announced on SENS on the same date.
Outlook
Economic
Trading conditions continue to be challenging in the Group`s various markets.
The rejection rate on micro loan applications is extremely high and it is
evident that lower income households are battling to make ends meet. The lack
of fresh capital in the Group has prevented any meaningful growth in the
various businesses within the Group. This has not prevented the Group from
continuing to trade within its capital constraints, manage costs and to
vigorously pursue the remaining loan book.
Afdawn strategy
In the six month period ended 31 August 2011 the Group has performed
admirably in spite of the lack of additional capital. The Board is in the
process of rationalising the Group. This includes creating focussed divisions
as well as making maximum use of shared premises and resources. All
financial, legal, IT and personnel functions will be centralised resulting in
both cost savings and maximisation of resources. Efforts are currently
underway to source joint premises as currently the major operating
subsidiaries and head office operate from three different locations. Limited
marketing has been undertaken, pending the recapitalisation of the Group. The
lack of new capital notwithstanding, the pipeline in Elite is excellent with
a number of significant employers wishing to make use of Elite`s services in
providing micro loans to their staff. Elite`s development of a call centre as
a delivery channel is sought after by employers who are based outside the
main centres such that employees can source micro loans without having to
travel to a micro lender facility in the town centre. Following mismanagement
and fraud, Dumont has been stabilised. The Dumont Health (Pty) Limited
systems are in the process of being redesigned which will provide seamless
delivery of product with complete back-office integration. The prospects for
growing this business, albeit off a very low base, are good. The property
bridging business remains depressed and is unlikely to return to the levels
experienced prior to the economic downturn. Opportunities remain for secured
structured lending products as well as expanding our management and
collection services to third parties. The present difficulties in accessing
credit from traditional sources provide a good opportunity to grow the
structured lending business, subject to proper credit appraisal and
appropriate security.
SARS
A reconciliation of all the Group`s tax liabilities and assets is now
complete and fully provided for in the accounts. SARS has been very
accommodating during this process especially regarding the reassessment of
prior years` tax liabilities or assets, following the restatement of the
prior years` results. An action plan has been concluded with SARS to resolve
all the outstanding matters.
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 III report on
Corporate Governance. Having regard for the size of the Group, the Board has
implemented improvements to the Group`s governance and management systems to
the extent that they are practical and relevant. The Group performs regular
reviews of its corporate governance policies and practices and strives for
continuous improvement in this regard.
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.
3. Related party transactions
The Group did not enter into any related party transactions during the
period, other than those disclosed in the Rights Offer circular relating to
PCI which was the subject of a fairness opinion.
4. Dividend
No dividends are contemplated for the 2012 financial year.
5. Appreciation
The board extends its appreciation to our management and staff for their
efforts during this reporttjing period. We also thank our customers,
suppliers and shareholders for their continued support.
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: 1st 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), CF
Wiese (independent non-executive), L Taylor (independent non-executive), HH
Hickey (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: 17 October 2011
Date: 17/10/2011 15:30:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
