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Published by portnoye, 2019-09-16 05:17:23

AfDawn Annual Report

AFDAWN 2014 ANNUAL REPORT

Annual Report 2014



CONTENTS

From the top Page
About your company 2
From the Chair 4
Key indicators 5
Comments from the Board 7
The Board 9
The Staff
Corporate Governance 11
Application of principles in King III 12
Annual Financial Statements 18
Audit Committee Report 21
Directors Responsibilities and Approval 23
Company Secretary’s Certification 25
Independent Auditor’s Report 26
Directors’ Report 27
Statement of Financial Position 28
Statement of Comprehensive Income 32
Statement of Changes In Equity 33
Statements of Cash Flow 34
Accounting Policies 35
Notes to the Financial Statements 36
Shareholders’ Analysis 43
Notice to the Annual General Meeting 78
Form of Proxy 79
Shareholders’ Diary
Corporate Information IBC
IBC

1AFRICAN DAWN ANNUAL REPORT 2014

About your company

Where we came from The report revealed fraud and mismanagement in Nexus and
Afdawn. Afdawn is currently co-operating with the various
African Dawn Capital Limited (the “Company”, “Afdawn” or authorities in their investigations of the Group’s directors and
“Group”) began life in 1998 as a micro finance company which, advisers. As part of the normalisation of the business, Grant
following its listing on the Altx in 2004, grew into a niche finance Thornton was appointed as auditors to the entire Group.
provider covering micro finance, debtor discounting and structured
property finance. Utilising internal expertise, professional advisers, In July 2010 Nedbank agreed to sell the majority of its shareholding
strategic alliances and acquisitions, the Group grew significantly to PCI, with the remaining shares being sold to a fund manager.
following its listing. With the significant rise in its share price, Shortly thereafter there were further changes to the Board with
Afdawn was able to acquire additional businesses and utilise the appointment in July 2010 of PC Gordon as executive chairman
shareholders’ funds to grow its loan books. and L Taylor as an independent non-executive Director. TF Kruger
was appointed as Financial Director in August 2010. H Hickey
Lending was concentrated on individuals and businesses that was subsequently appointed to the Board.
needed funding to develop, build and grow wealth, on the one
hand, and a burgeoning micro finance customer base on the other. The composition of the Board has changed significantly since the
last year end as the Company embarked on sourcing the appropriate
In 2009 the Group had significant exposure to the property sector capabilities at board level to execute the Company’s new strategic
where aggressive expansion had been pursued , mainly on property vision. On 10 April 2013 TF Kruger stepped down as CEO
developments. The Group faltered in 2009 due to the increase in and was appointed as financial director and on the same date
doubtful loans and the associated collapse in the property markets. Mr. JS van der Merwe was appointed as executive chairman. Further
This impacted significantly on the Group but more so on the changes occurred to the Board with the appointments of Ms. WN
majority of Afdawn’s executive management who, based on the Luhabe, Ms.V Lessing and Mr. JK van Zyl on 29 May 2013.
meteoric rise in the share price, had entered into a highly geared Subsequently the Board accepted the resignations of Ms. L Taylor
single stock structure with Nedbank. The falling Afdawn share (29 May 2013), Mr. CF Wiese (10 June 2013), Ms. WN Luhabe
price triggered margin calls by Nedbank which, when they were 30 September 2013), Dr. GE Stoop (5 November 2013) and
not settled, lead to Nedbank exercising its security and thereby Mr. TF Kruger (1 February 2014). On 24 February 2014 Mr. JS van
becoming the single biggest shareholder in Afdawn. der Merwe stepped down as CEO, while remaining on in the
position of chairman and Mr. WJ Groenewald was appointed as
The majority of the executive directors were subsequently removed the acting CEO. Mr. JS van der Merwe resigned from the board on
from the Board at the Company’s AGM in October 2009 and a 2 June 2014.
new Board was constituted. The newly constituted Board called
for a forensic review of the Company and some of its subsidiaries. As part of the turnaround, the Group was rationalised into two
The scope of the forensic review included: distinct areas of expertise; personal finance and structured lending.

• a review of Nexus Personnel Finance Proprietary Limited
(“Nexus”), a wholly owned subsidiary of Afdawn, in particular
the possible misappropriation of funds by employees or agents
of Nexus;

• the possible manipulation of the Afdawn and/or Nexus financial
statements for the year ended 28 February 2009;

• the dealing in Afdawn shares, and

• the possible manipulation of the Afdawn share price.

2AFRICAN DAWN ANNUAL REPORT 2014

About your company continued

The new vision The way forward
It is the intention of the Company to dispose of its existing business
As announced on SENS on 10 April 2013 and 15 October 2013, units in due course, subject to favourable market conditions.
the Board has subsequently decided to change the strategic vision Following the successful implementation of the Knife Capital
of the Company to become an active investment holding company, Acquisition, Knife Capital will form the first asset acquired in
acquiring shareholdings in entrepreneurial companies with a strong pursuance of the Company’s new strategic vision.
innovation drive. In terms of the new vision the Company will seek
to acquire interests in companies which are in a proven growth Existing Business Units from which the Company will focus on
phase and will assist these companies to enhance their capabilities divesting in the near future are the following:
in order to accelerate their long term sustainable growth. In pursuit
of this new strategy the Company announced: • Micro and personnel finance through Elite Group Proprietary
Limited (“Elite”);
• the acquisition of Knife Capital Proprietary Limited (“Knife
Capital”) on 8 April 2014. Full details of the Knife Capital • Medical aid discounting;
Acquisition are set out in the SENS Announcements dated • Collections, in support of the loan book. Elite runs a collections
13 December 2013 and Tuesday, 18 February 2014; and
department which deals with recoveries, tracing, collections
• A rights issue which was concluded on 4 April 2014. and all related legal work; and
• Properties in possession acquired as a result of exercising
Following the implementation of the Knife Capital acquisition, Mr. securities held in respect of defaulting loans and includes rental
WJ Groenewald was appointed as permanent CEO, Mr. EA van earning properties.
Heerden as the financial director, Ms. A Böhmert as executive
director and Mr. SM Roper as independent non-executive director. Our report
As a result of the Knife Capital acquisition, Mr. JK van Zyl became
an executive director. This report builds on the 2013 annual report. The 2014 report is
guided by the Global Reporting Initiative (GRI3) reporting guidelines
as part of guiding the users to a conclusion on the quantitative
(financial indicators) and qualitative (social, environmental and
sustainability) events reported on for the 2013 period.

3AFRICAN DAWN ANNUAL REPORT 2014

The company is being

transformed and has
been restructured in
order to set the stage
for investments in
innovative and
entrepreneurially
driven companies

From the Chair

Our former Chairman, Mr. JS van der Merwe, commented in his 2013 Report that action plans have to be implemented in order to
advance the vision of the company. To this end, the company is being transformed and has been restructured in order to set the stage
for investments in innovative and entrepreneurially driven companies. In view of the new vision, as announced on SENS on 10 April 2013
and 15 October 2013, the Board decided to change the strategic vision of the Company to become an active investment holding
company, acquiring shareholdings in entrepreneurial companies with a strong innovation drive. In terms of the new vision, the Company
will seek to acquire interests in companies which are in proven growth phases and will assist these companies to enhance their capabilities
in order to accelerate their long term sustainable growth.

In pursuit of this new vision and in order to acquire the necessary capabilities required to implement the strategy, the Company
subsequent to the year end:
• acquired 100% of the issued share capital of Knife Capital. Full details of the Knife Capital acquisition are set out in the SENS

Announcements dated Friday, 13 December 2013 and Tuesday, 18 February 2014; and
• completed a rights offer to shareholders on 4 April 2014 resulting in rights taken up in the amount of R21,8m.

The first half of the 2015 financial year will be marked by the integration of Knife Capital, further restructuring of the cost structures
and positioning the company for further investments.

The Board and management are acutely aware of the remaining challenges that face the company. Management is also working
diligently to disinvestment from non-core legacy Afdawn assets. It is of paramount importance to establish a clean platform from which
a new strategy can evolve.

I am encouraged that the journey to accomplishment of this is well underway.

Jacques Groenewald
Acting Executive Chairman

4AFRICAN DAWN ANNUAL REPORT 2014

Key Indicators

Profitability - Comprehensive Income R ' 000 2014 2013 2012
Income from operations R ' 000 6,079 6,600# 31,472*
Sundry income R ' 000 34 570# 22,622*
Total income R ' 000 6,113 7,170# 54,094*
Operational Expenses R ' 000 39,962*
Net (loss)/profit 21,474 10,655# 10,405
Basic (loss)/earnings per share Cents (19,840) (2,110) 3,23
Diluted (loss)/earnings per share Cents 2,79
Headline (loss)/earnings per share Cents (3,90) (0,41) 3,06
Dividends Cents (3,90) (0,28) -
Balances on reporting date - Financial Position (3,14) (0,40)
Net recoverable debtors
Cash - -
Properties in possession
Total Assets R ' 000 19,497# 83,340 69,723
Long term loans R ' 000 1,084# 9,014 15,451
Total Liabilities R ' 000 25,662
Value, Assets exceeding liabilities R ' 000 24,748 21,335 122,288
Net Asset Value per share R ' 000 105,282 121,542 21,590
Share price trading at year - end R ' 000 22,682 56,927
Market capitalization R ' 000 8,844# 58,291 65,361
Number of shares in issue 61,871 63,251
Number of branches Cents 43,411 12,90
Number of employees Cents 12,45 16,00
R ' 000 8,54 7,00 81 309
9,00 508 184 155
45,737 35,572
508 184 155 508 184 155 15
96
15 15
97 102

# These figures were adjusted to remove discontinued operations. Refer to note 13 of the financial statements.
* These figures were not adjusted to remove discontinued operations relating to Elite.

5AFRICAN DAWN ANNUAL REPORT 2014

The company will

focus on acquiring
shareholdings in
entrepreneurial
companies

Comments from the Board

Strategic Intent South African Revenue Services (“SARS”) liability

As alluded to in the Chairman’s report, the past period has seen Afdawn continues to work closely with SARS on all aspects relating
a concerted effort given to transforming and preparing the company to the company’s tax position in terms of the agreed action plan
to enable it to execute on the announced change in vision to with SARS. Documentation as set out in Section 200 of the Income
become an active investment holding company. The company will Tax Act, which enables companies to settle their tax obligations
focus on acquiring shareholdings in entrepreneurial companies, with SARS, has been submitted and queries raised by SARS answered.
with strong innovation drive, which are in proven growth phases Afdawn has vigorously explored and consulted with various
and by enhancing the capabilities of these entities to accelerate independent tax experts to ensure that a beneficial outcome for
long term sustainable growth. Afdawn could be achieved. The SARS liability has been fully provided
for in the accounts with regards to returns that have been assessed
We remain cognisant of the remaining challenges and believe that and disagreements were provided for to the extent of the most
prudently constructed plans will prove sustainable. likely outcome.

Changes to the board of directors Allegro Properties Limited (“Allegro”) Status

The composition of the Board has changed significantly since the Afdawn previously concluded a Memorandum of Understanding
last year end as the company embarked on sourcing the appropriate (28 February 2013) which will facilitate an amicable conclusion
capabilities at board level to execute the new vision. to the matter. Progress has been slow in this regard. Thus far the
company has not become aware of any information during its
Changes up to 28 February 2014: deliberations that will alter the conclusion reached previously. To
the date of signing this report no claims have been received by
On 10 April 2013 Mr. TF Kruger stepped down as CEO and was Afdawn, nor has it been possible to establish any basis for a
appointed as financial director and on the same date, Mr. JS van potential claim against Afdawn and therefore no provisions have
der Merwe was appointed as executive chairman and CEO. been made for any such contingency.

Further changes occurred to the Board with the appointments of National Housing Financing Corporation ("NHFC")
Ms. WN Luhabe, Ms. V Lessing, Mr. JK van Zyl on 28 May 2013
and Mr. WJ Groenewald as acting CEO (24 February 2014). The In terms of the settlement agreement with the NHFC that was
Board accepted the resignations of Ms. L Taylor (29 May 2013), signed on 30 May 2011, Nexus (a wholly owned subsidiary of
Mr. CF Wiese (10 June 2013), Ms. WN Luhabe (30 September Afdawn) had a facility of R5 million that became payable in
2013), Dr. GE Stoop (5 November 2013) and Mr. TF Kruger October 2013. Nexus is currently negotiating extending the terms
(1 February 2014). with the NHFC.

Changes subsequent to 28 February 2014: Update on investigation into past board members and
professional advisors
The appointment of Mr. EA van Heerden as financial director
(27 March 2014), Mr WJ Groenewald as CEO (28 March 2014), Following on from the forensic investigation commissioned in
Ms. A Böhmert (22 April 2014) and Mr. SM Roper (22 April 2014). 2010, we are cooperating with the various regulatory bodies and
The board accepted the resignation of Mr. JS van der Merwe South African Police Services. We can advise that progress remains
(2 June 2014) and appointed Mr. WJ Groenewald as acting chairman slow and frustrating.
on the same date.

7AFRICAN DAWN ANNUAL REPORT 2014

Comments from the Board continued

Trading Conditions and Operational Review
The Local Market
The Gross Domestic Product (GDP) in South Africa contracted an annualized 0.60 percent in the first quarter of 2014 over the
previous quarter. High unemployment and pressure on available domestic spending continues to impact on the micro lending space
in South Africa.

The unsecured lending space continues to be widely covered in the media and this market has come under pressure as consumers battle
the debt trap resulting in higher bad debts being reported.

Elite
Elite continues to maintain good market creditability and exceptional systems in the unsecured lending space. The period under review
remained challenging given the events that had transpired in the economy. Elite has not relaxed its credit criteria in assessing affordability
and would rather retain a healthy credit quality in its book.

Debt Management
The internal bridging business remains a collection book which has proved very challenging to collect.

Appreciation 
The board extends its appreciation to the management and staff of the Group for their efforts during this reporting period. We also
thank our customers and suppliers for their continued support.

Jacques Groenewald EA van Heerden CA(SA)
Acting Executive Chairman Financial Director

5 August 2014

8AFRICAN DAWN ANNUAL REPORT 2014

The Board

The board at the year end Ms. V. Lessing (“Vanya”)
Independent Non-Executive Director
Mr. JS van der Merwe (“Mac”)
Executive Chairman Vanya was appointed on 29 May 2013. Vanya is the CEO of the
Sure Travel Group, responsible for managing the interests of
Mac was appointed to the Board on 10 April 2013. Mac was shareholders, licensees and suppliers. The Sure Travel Group
educated as a Mechanical Engineer and has studied Business manages the interests of 100 travel companies in South Africa
Management at UNISA. Mac has comprehensive entrepreneurial and Namibia. Vanya is the former CEO of ASATA (Association of
experience over a period of 30 years. In 1982 he founded and was Southern African Travel Agents). During her tenure there (2001
Managing Director of Park Motors Group, and in 1989 founded - 2005), she led the travel industry through change and a series
VaalMac Engineering in Meyerton and Saldanha. In the 1990’s of sensitive negotiations, resulting in a new industry business
Mac co-founded Skills Accel, a skills development company. In model. Vanya has extensive experience in collaboration and
1995 Mac was responsible for the listing of VaalMac Engineering interaction with SME's, expediting turnaround strategies. Her strong
through a reverse listing of City Investment Holdings and Spicer negotiating skills brings 'on the ground' expertise to the Board.
Mitchell Holdings. One of the paramount ventures was acquiring Vanya is also a Board member of Sure Holdings (Pty) Ltd, ASATA
the controlling shareholding of President Steyn Gold Mine in 1997 and Worldwide Independent Travel Network Ltd (WIN).
and the turnaround of the five shaft operation securing 4,500 jobs.
The mine was later listed on the JSE and sold to a Canadian Mr. JK van Zyl (“Keet”)
company. Mac’s experience in business reaches over start-up Independent Non-Executive Director
businesses to mature profitable projects all within an entrepreneurial
framework. Early in 2002 the van der Merwe family bought various Keet was appointed on 29 May 2013. Keet is a ‘Venture Catalyst’
hospitality businesses under the banner of the Zorgvliet Group with extensive high-growth investment experience. He structured
and in 2011 he initiated the development of Community+27, an various private equity funds in Southern Africa for a US fund-of-
online community portal, which has recently been completed. funds investor and worked in growth finance at industry-leading
Mac resigned from the board on 2 June 2014. companies such as Procter & Gamble, Investec Bank and Here Be
Dragons (HBD) Venture Capital – the fund managers behind SA
Mr. WJ Groenewald (“Jacques”) internet billionaire Mark Shuttleworth's successful venture capital
Chief Executive Officer fund. He co-founded growth equity fund manager; Knife Capital
to fund and support knowledge-enabled entrepreneurs. Keet is
Jacques was appointed as a non-executive director on 17 November passionate about building the early-stage funding eco-system in
2011 and was subsequently appointed as the acting CEO on Sub-Saharan Africa. He co-founded the Grindstone business
24 February 2014, CEO on 28 March 2014 and acting chairman accelerator that will assist SA technology SMEs to become
on 2 June 2014. He holds a B Com (Hons) from the University of sustainable and fundable. Keet has extensive experience in the
Stellenbosch. He was an investment professional in the asset total venture capital value chain and will bring venture capital
management, investment banking and hedge funds industry with experience and skills that will reduce risk and improve desired
18 years’ experience. outcomes in line with the new vision of the Company.

Ms. HH Hickey (“Hester”) Mr. W Somerville (“William”)
Independent Non-Executive Director Company Secretary

Hester was appointed as a non-executive director on 21 February William is a chartered secretary and holds an ACIS, ACMA and a
2011. She is a chartered accountant and consults to various Diploma in Corporate Law (RAU). He was formerly Group Company
companies specializing in risk and governance. She also performs Secretary of Absa, a position he held for 12 years until October
the Board evaluation processes for the Institute of Directors. She 2007. He has extensive experience in company secretarial and
is currently non-executive director and audit committee Chair for corporate governance matters. This includes providing support to
Omnia Holdings Limited, Pan African Resources Plc and a non- the board of directors and committees, corporate governance
executive director of Cashbuild Limited. She is a past Chairman advice, annual reports and director orientation and training. He
of the South African Institute of Chartered Accountants and has has experience in the JSE Listings Requirements as well as
worked in senior positions for a number of listed companies and considerable knowledge of employee share schemes and BEE
serves on several audit committees. Hester lectured auditing at schemes. William now offers company secretarial outsourcing
the University of the Witwatersrand and was a member of the solutions (where he acts as company secretary to a number of
King II task team. companies) and corporate governance advisory services. He is a
member of the Institute of Directors, Southern Africa (IoDSA) and
serves on the IoDSA’s board appraisal panel. William resigned on
31 July 2014.

9AFRICAN DAWN ANNUAL REPORT 2014

The Board continued

Changes to the board subsequent to the year end Mr. EA van Heerden (“Eben”)
New appointments Financial Director

Mr. SM Roper (“Stephen”) Eben qualified as a Chartered Accountant (CA(SA)) in 1995. Eben
Independent Non-Executive Director has a proven track record as a specialised investment expert with
noteworthy accomplishments in business building and strategy,
Stephen holds an Hons BCompt, PG Dip Tax Law , PG Dip Financial corporate finance and mergers. His career commenced with Ernst
Policy, and is a chartered accountant with 26 years’ experience. & Young two decades ago whereafter he progressed to hold various
He has extensive experience in investments having served in the directorships in large and small organisations alike. Eight years
research team of one of South Africa’s largest fund managers. ago he shifted his focus to early stage investments and actively
During this time he had responsibility for investment research of pursued a career with Mark Shuttleworth’s growth equity fund:
industrial companies in South Africa. He has also served on the HBD Management Services Proprietary Limited. He has since then
private equity investment committee of that fund manager and been instrumental in the investment, growth and exit of a number
has corporate finance and business rescue experience. He currently of high profile growth equity investments, including CSense and
practices in the area of strategic management. Fundamo where he held the position as deputy chairman. In 2010
he co-founded Knife Capital, of which he is currently the CEO.
Ms. A Böhmert (“Andrea”)
Executive Director Mr. Alun Rich (“Alun”)
Company Secretary
Andrea is a director of Knife Capital, a Cape Town based Growth
Equity Fund with a successful track record in exiting portfolio Alun is a Fellow member of ICSA and gained his experience and
companies including Visa and General Electric. Before joining Knife knowledge of corporate governance as manager at Deloitte &
Capital, Andrea was the founder and co-managing partner of Hasso Touché and as the founding partner of Wilson Rich & Associates.
Plattner Ventures Africa Proprietary Limited. Andrea has been
actively involved in numerous initiatives aiming to accelerate the Changes in office
African entrepreneurial ecosystem such as Angelhub, South Africa’s
first structured Angel Investment vehicle, the Bandwidth Barn, Mr. JK van Zyl, previously non-executive independent director was
South Africa’s oldest IT incubator, as Exco member of Silicon Cape, appointed as executive director on 28 March 2014 and
a member of Endeavor VentureCorps and as an Angel Investor in Mr. WJ Groenewald was appointed also as acting Chairman on
the Google Umbono Incubator Program. Recently, Knife Capital 2 June 2014.
launched its own growth and funding platform or accelerator
known as Grindstone, a later-stage business accelerator in Cape Resignations
Town aimed at assisting entrepreneurs with solving the problems
common to scale-ups including: everything from coping with Mr. JS van der Merwe resigned as director on 2 June 2014 and
accelerated growth to raising funding, taking advantage of M&A Mr. W Somerville resigned as company secretary on 31 July 2014.
opportunities, securing international partnerships, sharpening their
business model and executing on their plan. Previously, Andrea
worked at Dimension Data and Siemens, where she was responsible
for the corporate strategy for Southern Africa. She holds a Masters
degree in Marketing and Management of Technology and Innovation
from the Rheinisch Westfälische Technische Hochschule (RWTH)
in Aachen, Germany and an MBA from Henley Management College
in the United Kingdom.

10AFRICAN DAWN ANNUAL REPORT 2014

The Staff

The current year saw a small decrease in our work force from 102 Remuneration
to 97. Afdawn strives to uplift and enable individuals of all
backgrounds and thereto we are proud to report: The remuneration policy is one of simplicity with remuneration
assessed to be in line with targets with additional incentive for
Women (as % of total workforce) 2014 2013 2012 performance. It is assessed to remunerate in such a way to develop
65% 65% 59% and retain talent currently employed in the group. This helps to
attract and retain people with the appropriate skills and knowledge
Women of colour (as % of total 54% 54% 50% to meet the present and future demands.
women employed)

Total people of colour (as % of total 46% 36% 38%
workforce)

Afdawn’s empowerment process is not just by way of employment
but also through in-house training, knowledge sharing and
specialized external training where needed.

  Male Female

  African White African White Total

Executives 0 5 01 6
Senior management 0 5 02 7
Middle management 0 2 02 4
Junior management 0 4 2 10 16
Semi-skilled 6 7 14 14 41
Unskilled 5 0 18 0 23
Total permanent 10 23 30 29 92
Temporary employees 1 0 40 5
Total employees 11 23 34 29 97
97
34 63

11AFRICAN DAWN ANNUAL REPORT 2014

Corporate Governance

1. The Board The composition is the result of compliance with regulations,
complexity of the Group, risks and skills needed. Each member
Purpose: deserves their position on the Board with their guidance and
expertise highly regarded and collectively acting as a strong
To lead the Group with integrity, through policies, strategic and effective committee. The appointments in the period were
decisions, planning, governance, resource allocation, standards of important to closely align the skills required for the new vision on
conduct and share- and stakeholders relationship management. the Board.

Composition: The position of the chairman and CEO were separate at the
beginning of the year, with the chairman being an independent,
The board composed of the following directors at the year end: non-executive director. Mr. JS van der Merwe then assumed the
Mr. JS van der Merwe (non-executive chairman); position of executive chairman, with previous chairman Mr. Wiese
Ms. HH Hickey (independent non-executive director); assuming lead independent non-executive director. Subsequently,
Mr. WJ Groenewald (acting CEO); Ms. V Lessing was appointed lead independent non-executive
Ms. V Lessing (lead Independent non-executive director); and director replacing Mr. Wiese. On 24 February 2014 Mr. JS van der
Mr. JK van Zyl (independent non-executive director). Merwe stepped down as CEO, while remaining on in the
position of chairman and Mr. WJ Groenewald was appointed
Mr. TF Kruger (previous executive officer, appointed as financial as the acting CEO. With the resignation of Mr. JS van der Merwe
director on 10 April 2013) resigned from the Board with effect on 2 June 2014, Mr. WJ Groenewald was appointed as acting
from 1 February 2014 and was replaced by Mr. EA van Heerden chairman. The chairman is re-elected to the position on an
on 27 March 2014. annual basis by the Board. The chairman was appointed by the
Board and has been assessed and possesses the necessary skills,
Changes to the board after the year end: experience and leadership qualities to lead the Group. At the year
end, the chairman was not a member of the remuneration and
New appointments nominations committee, but is invited to attend on an ad-hoc
Mr. EA van Heerden was appointed as Financial Director on basis, due to his skills and expertise. The chairman is a permanent
27 March 2014, Ms. A Böhmert as executive director on 22 April invitee to the audit committee. The Board members individually
2014 and Mr. SM Roper as independent non-executive director and collectively have the necessary skills, expertise and experience
on 22 April 2014. ensuring effective and ethical decision making and strategy
implementation.
Changes in office
Mr. JK van Zyl (previously independent non-executive director) Frequency of meetings:
was appointed as executive director on 28 May 2013 and Mr. WJ
Groenewald was appointed as acting executive Chairman on The Board should meet at least 4 times per year, but due to
2 June 2014. ad-hoc matters, 11 meetings were held up to the financial
yearend. Actual meetings and attendance are set out in the
Resignation table below.
Mr. JS van der Merwe resigned as director on 2 June 2014.

18 Mar 4 April 23 May 28 May 10 Jun 28 Sep 30 Sep 15 Oct 5 Nov 20 Jan 17 Feb

2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014

TF Kruger √√√ √√√√√√ √ -

CF Wiese A√√ √ - - - - - - -

WJ Groenewald √ √ √ √ √ √ √ √ √ √ √

L Taylor √√√ √ - - - - - - -

GE Stoop √√√ A√√√ -√ - -

HH Hickey √√√ √A√√√√ √√

JS van der Merwe - - √ √ √ √ √ √ √ √ √

K van Zyl - - - - √ √√ AA √√

V Lessing - - - - √ √√A√ √√

WN Luhabe - - - -√√A - - - -

A - Apology

12AFRICAN DAWN ANNUAL REPORT 2014

Corporate Governance continued

Roles and responsibilities: The Board and our Shareholders:

The role of the Board remained to lead the Group towards The year under review was difficult, requiring strategic input from
accomplishing its purpose of creating wealth for its share- and major share- and stakeholders. The active inputs and decision
stakeholders. The Board is able to fulfill its function as the members making resulted in Afdawn pursuing a new vision. The Board has
remain committed to the Group and with years of experience and decided to change the vision of the Company to become an active
specialized skills, are able to add value and make the required investment holding company acquiring shareholdings in
strategic decisions. The Board meets at least four times per annum entrepreneurial companies with a strong innovation drive and
and when needed to facilitate any ad-hoc strategic input. The which are in a proven growth phase and subsequently enhancing
focus is kept on Afdawn’s core business being financial services, the capabilities of these entities to accelerate long term sustainable
personal loans and managing/collection of debt. Subsequent to growth. Shareholders are referred to the SENS announcements
the previous year end the vision of the Group was however changed. dated 10 April 2013 and 15 October 2014 in this regard.

The Group as an ethical corporate citizen: Assessing and developing our Board:

The Board is ultimately responsible for leadership and governance Our newly appointed Board members are formally inducted through
of the Group, setting the tone at the top which promotes ethical a programme comprising reading material, interviews with key
behaviour. This remains a critical quality that vests in the group’s personnel and an introduction to Afdawn and its operations. In
leaders. The Board has been able to maintain the Afdawn and Elite line with the JSE Listings Requirements applicable to Altx listed
brands as credible names in an ever increasing and difficult market. companies, all Board members are required to attend the Altx
This was accomplished with good governance built on a solid Directors Induction programme (“DIP”) presented by Institute of
ethical foundation. The Board embraces the principles of the King Directors and formally by WITS Business School. Mr WJ Groenewald
Report on Governance for South Africa 2009 (“King Code III”). The and Dr GE Stoop attended the programme during 2013 and new
Board is of the opinion that the corporate governance is in line members are scheduled for the latter part of the 2014 year. The
with the Group’s size, complexity, risks and objectives. The Board performance of each individual Board member and Board as a
along with management is evolving continuously to align it with whole is assessed internally on an annual basis. Directors are only
King Code III compliance. The Board is of the opinion that the nominated for re-election after satisfactory performance
Group complies in all material respects with the principles embodied assessments and outcomes. If areas for additional development
in King Code III and the additional requirements for corporate are identified, these are managed through either ad hoc internal
governance stipulated by the JSE. Where specific principles have training or specialised training provided by reputable training
not been applied, explanations for these are contained in the institutions. Directors’ remuneration is aligned with the outcomes
section detailing application of principles in King III. of the performance assessments; the performance assessments
for 2013 were informal, with formal assessments with specific
In determining the strategy and long term sustainability, the reference to the CEO and financial director.
members keep abreast of the concerns and consideration of the
impact of its operations on the economy, society and the To monitor and keep track of Director dealings:
environment. It remains the Board’s goal to positively improve
the lives of its customers and other stakeholders. The current focus To ensure that there is no conflict of interest or threat to the
remains on shareholder and employees’ upliftment and rolling out independence of Board members, the Directors have to declare
the new vision of the Company. This new vision encompasses any and all interests in contracts entered into by them and the
investment in and the development of entrepreneurial companies. Group. Dealings in securities by Directors, senior managers and
employees with access to management reports or price sensitive
information are controlled and need to be authorised for clearance
by the Chairman. No trading is allowed during closed periods or
when information that could affect the share price is not yet
disclosed to the public. Any trading done by Directors of the Group
or subsidiary companies, or the Company Secretary is announced
on SENS.

13AFRICAN DAWN ANNUAL REPORT 2014

Corporate Governance continued

2. Remuneration committee Actual executive directors’ remuneration is set out in the table
below:
Purpose:
To set a fair remuneration philosophy and apply a policy for the Company: Total Total
remuneration of Directors and employees of Afdawn Group. Mr. TF Kruger Remuneration Remuneration
Mr. JS van der Merwe
Composition: 2014 2013
The remuneration committee consists of: Subsidiary: (R’000) (R’000)
HH Hickey, WJ Groenewald, V Lessing Dr GE Stoop
2 000 1 700
The remuneration committee should meet at least twice a year. 1 069 -
Details of actual meetings and attendance thereof is set out in
the table below. 1 605 1 526

4 April 28 May Actual non-executive directors’ remuneration is set out in the
2013 2013 table below:

TF Kruger (Invitee) √ - HH Hickey Total Total
CF Wiese √ √ WJ Groenewald Remuneration Remuneration
WJ Groenewald √ √ JK van Zyl
L Taylor √ √ V Lessing 2014 2013
GE Stoop (Invitee) √ - WN Luhabe (R’000) (R’000)
HH Hickey √ √ L Taylor
JS van der Merwe - √ CF Wiese 150 240
150 240
Due to the sensitivity and importance of remuneration, it is 90
specifically managed by a separate remuneration committee 80 -
assisted by the human resources department. The remuneration 40 -
committee consists of two independent non-executive directors 60 -
and one executive director and the chairman of the committee 70 240
is not the chairman of the Board. The approved terms of reference 240
of the committee were reviewed in the period under review. The
main responsibility of the committee is to approve the remuneration Roles and responsibilities:
of the executive Board members and significant adjustments to
employee remuneration. The executive directors suggest the • determining, reviewing and approving the Company’s policy
remuneration of the non-executive directors and this is submitted on remuneration for both executives and managers;
to shareholders at the AGM for approval by special resolution.
• the finalisation of annual increases for the Group employees;
The committee felt that the current remuneration of directors is
in line with the market, and will ensure that the Group retains the • the policy for determining executive management
required skills and expertise within the Group. At the Company’s remuneration;
AGM held on 15 October 2013 a reduction in the non-executive
directors fees from R240 000 to R120 000 per annum was approved. • the remuneration packages for the executive management
team and financial director, including bonuses, incentive
schemes and increases; and

• ensuring that the remuneration packages of the non-executive
directors are submitted to the AGM for approval.

The executive directors earn a fixed salary and a suitable incentive
determined by their performance.

14AFRICAN DAWN ANNUAL REPORT 2014

Corporate Governance continued

Remuneration of non-executive directors is fixed and they are not The nomination and appointment of members to the Board is done
paid per meeting attended due to the high number of ad-hoc through a formal and transparent process, executed by the nomination
meetings. The remuneration philosophy remains one of simplicity, committee. The committee is combined with the remuneration
practicality and sustainability which is aligned to market and committee due to the size and complexity of the Board. The
industry trends. The policy ensures compensation for proven and nomination committee consists of two independent non-executive
sustainable performance both over the short and long term. directors and one executive director (the CEO). The chairman of
The policies ensure that there are no incentives for risk taking the Board is an invitee. Part of the responsibility of the committee
and/or termination of contracts due to changes in management is to identify and recommend individuals for vacant positions and
structure within the Group. The current focus remains on costs also to fill skills shortages on the Board that will enhance the overall
saving, strict management of cash and building on basics, resulting governance and leadership of the Board and Group.
in no salary increases within the Group other than the one newly
appointed Director. During the year, the nomination committee executed its
responsibilities by enhancing the skills of the Board by nominating
The current executive remuneration consists of: an additional member who brings specialised skills, experience and
• basic salary and suitable incentives for executive directors and knowledge relating to micro finance to the Board. Nominated
candidates are screened for knowledge, experience, qualifications,
executive management, and integrity, skills, capability and independence where needed. Only
• non-executive board fees based on prevailing market rates for once all required requirements are met with, will the individual be
nominated for election.
similar businesses (using the PricewaterhouseCoopers annual
publication non-executive directors remuneration) as a guide The nomination committee ensures that members nominated for
and comprise a fixed annual fee not related to the number of election on the audit committee are suitable for the position and
meetings attended. that the committee collectively have the required qualifications
and experience. All members that are recommended by the
There are currently no share incentive schemes in place although nomination committee to the Board are only approved and
this matter is still under consideration. appointed by the Board by unanimous Board decision. There is a
clear balance of power and authority at Board of directors level
3. Nomination Committee accordingly no one director has unfettered power of decision making.

Purpose: 4. Group Executive Committees (“Exco”)

To nominate and ensure that the Board composition complies Purpose:
with all legal and other requirements and to ensure that the Board
possesses the needed skills and knowledge that makes for a To actively manage the company and its subsidiaries on a day to
collectively effective Board. day basis and align operations with Board strategies.

Composition: Composition:

The nomination committee consists of: Since the year end, Mr. WJ Groenewald, Mr. EA van Heerden,
HH Hickey, WJ Groenewald, V Lessing Mr. JK van Zyl and Ms. A Böhmert were appointed to the
executive committee.
Roles and responsibilities:
Frequency of meetings:
As prescribed, the committee meets at least twice a year, or on
an ad-hoc basis when a nomination is required. Details of actual Meetings are held monthly but more recently they were conducted
meetings and attendance thereof is set out in the table below. on an ad hoc basis as and when required.

TF Kruger (Invitee) 4 April 28 May The Afdawn Group consists of a number of operating subsidiaries,
CF Wiese 2013 2013 segmented into:
WJ Groenewald
L Taylor √ - • Head office and listed entity: African Dawn Capital Limited;
GE Stoop (Invitee) √ √
HH Hickey √ √ • Micro finance, front offices, call centre, medical practitioner
JS van der Merwe √ √ finance and collections: Elite Group;
√ -
√ √ • Debt management and commercial collections: African Dawn
- √ Debt Management.

The governance of the Group is set at Board level and a high
standard is followed through to the Company level. Although all
subsidiary companies have a common thread of specialised financial
services, each requires their own expertise and therefore consists
of separate management teams headed by a divisional CEO.

15AFRICAN DAWN ANNUAL REPORT 2014

Corporate Governance continued

With the consolidation of offices in the previous year, knowledge Frequency of meetings:
and skills were shared, paired with seamless communication
throughout the Group. Exco meetings are formally minuted and Meetings took place four times during the period, and a minimum
approved. The meetings deal with detailed operational events and of two meetings per year are required. The audit committee has
practical solutions that are communicated to the Board. an independent role with accountability to both the shareholders
and the Board as per their terms of reference that were approved
The Board membership of all the subsidiary companies comprises by the Board. The committee does not assume the function of
a combination of the Exco members plus two additional directors. management which is vested in the executive directors, officers
There is therefore direct Exco representation on all subsidiary and members of the executive committee, but is notified of any
boards. The Chairman of Afdawn reports and is accountable to material risks or disagreements with internal and external auditors.
the Afdawn Board.
Roles and responsibilities
5. Company Secretary
• Integrated and financial reporting
The Company Secretary is responsible for assisting the Board with
administration, application of information regarding the Act, JSE Review and comment on the annual financial statements,
Listing Requirements, directors’ responsibilities and powers. The annual integrated report, annual condensed results, interim
Board is entitled to appoint and remove the Company Secretary. results, trading update announcement to ensure compliance
Mr. W Somerville (on behalf of William Somerville Governance with International Financial Reporting Standards and the Act;
Services cc) resigned as company secretary on 31 July 2014 and Review and approve the appropriateness of accounting policies,
Mr. A Rich (on behalf of Statucor Proprietary Limited) was appointed disclosure policies and the effectiveness of internal financial
in his stead. In terms of paragraph 3.84 (i) and (j) of the JSE controls; Perform a review of the Group’s integrated reporting
Listings Requirements the board has satisfied itself that the company function and progress and consider factors and risks that could
secretaries including the individual shareholders and directors of impact on the integrity of the Integrated Annual Report;
the juristic person possess the appropriate expertise and experience Recommend the Integrated Annual Report to the Board for
required and considers him qualified to perform his duties in approval. Determining the levels of assurance required on
accordance with applicable legislation and is fit and proper for the integrated and financial reporting.
position. There is an arm’s-length relationship between itself and
the company secretary and he is not a director on the board. • Finance function

6. Audit and Risk Committee Considers the expertise and experience of the financial director;
Considers the expertise, experience and resources of the Group’s
Purpose: finance function; Considers the effectiveness of internal control
over finance.
To assist the Board in overseeing the integrity of the financial
statements, the effectiveness of internal control over financial • Internal audit
reporting, to assess the independence and qualifications of the
independent registered auditor, to ensure the Company’s compliance Due to capital and resource constraints, the group does not
with legal and regulatory requirements and assessing the expertise have a separate internal audit function. The oversight of internal
of the financial director. controls remained with the audit committee and the required
testing and investigation was performed in-house by competent
Composition: financial staff. A separate internal audit division with qualified
internal auditor will be formalised and implemented in the
At the yearend the committee was composed of: near future. The internal audit tasks remain with the audit
HH Hickey (Chairman), V Lessing, JK van Zyl committee for the time being until the internal audit
department will take responsibility for all internal audit
Subsequent to the yearend, Mr. JK van Zyl stepped down and was matters.
replaced by Mr. SM Roper.
• External audit
The audit committee comprised three independent non-executive
directors (HH Hickey, V Lessing and JK van Zyl). The committee Act as a liaison between the external auditors and the Board;
is chaired by HH Hickey, who is a Chartered Accountant and highly Obtain information in order to satisfy themselves as to the
skilled with extensive experience in various fields, with a strong competency of the external auditors and then nominate for
risk and governance background. Due to the changes in the Act appointment by Shareholders; Consider the scope of audit and
and complexity of IFRS, specialised knowledge is needed from time non-audit services which the external auditors may provide
to time and this is contributed by invitees attending meetings on to the Group; Review letters from auditors stating points of
an ad-hoc basis. improvement or control deficiencies; Approve the fees of the
external auditors and assess their performance; and assess
annually the independence of the external auditors.

16AFRICAN DAWN ANNUAL REPORT 2014

Corporate Governance continued

• Risk management 8. Social and Ethics Committee

There was no separate risk committee and the audit committee During the year a formal social and ethics committee was
assumed the responsibility and task. The responsibilities include, established with an approved terms of reference. The committee
ensuring that management’s processes and procedures are considered matters relating to good corporate citizenship,
adequate to identify, assess, manage and monitor, Company employment equity, empowerment and socio-economic
specific and Group risks; development and contributing to society in general. The primary
purpose of the committee is to ensure the wellbeing of the
The following risks received detail attention and mention: Company, its employees, stakeholders, clients, society and monitor
ethical practices in all areas.
• Financial / Liquidity risks,
• Information Technology risk The social and ethics committee met once during the year under
• Human resources risk review and comprised of Mr. WJ Groenewald (chairman), Dr. GE
• Operational risk Stoop and Mr. TF Kruger. Details of actual meeting and the
• Legal/compliance risk attendance thereof is set out in the table below.

Managers are urged to identify, report and assist with mitigating TF Kruger 28 August
controls and procedures to lower the risk to acceptable levels. WJ Groenewald 2013
GE Stoop √
7. Risk Management √

The Board is ultimately responsible for the management of risk.
Due to the importance and need for good governance it is assisted Subsequent to the year end, Messers Kruger, Groenwald and Stoop
by the audit and risk committee. The management of risk has stepped down from the committee and Mr. SM Roper (chair),
included a proactive approach through an implemented system of Mr. JK van Zyl and Ms. A Böhmert were appointed in their stead.
effective internal controls maintained and constantly improved by
competent ethical managers. The management of risk relies on
well-established governance processes and relies on both individual
responsibility and collective oversight, supported by comprehensive
reporting. The risk approach is one of strong corporate oversight,
with the executives having proactive participation in managing the
risks, sub committees are responsible to identify and contribute to
mitigating strategies to manage risk to an acceptable level. Risk
management is seen as the responsibility of each and every employee.

The significant risks are formally communicated to the Board (via
the audit and risk committee), in minutes of meetings and the risk
register, which monitors that risks taken are within acceptable
tolerance and appetite levels. The risk appetite is the maximum
residual risk that Afdawn is willing to take, the parameters being
set by business strategies, business models, review and approving
budgets, forecasts and monthly management packs.

Risks pertaining to the Group as a whole, but especially focused
on liquidity, asset management, credit risk, market risk and human
resources, are noted and managed on an in-house risk register
presented at monthly Exco meetings.

The identified risks, their likelihood of occurrence, severity if
occurred, mitigating control and the risk management outcome
are discussed on a monthly basis. Risks on the register are ranked
and prioritized ensuring swift response and intervention to risks
outside the Board’s tolerance levels. Liquidity risks are managed
on a short term, and long term basis ensuring pairing of known
cash in and outflows, with predictions of expected cash flows.
Credit risk is formally managed by the credit committee, who is
tasked with managing advances in such a way to ensure repayment
of capital plus earnings, and to assess the outstanding value with
expected repayment and manage collections of outstanding debts.

17AFRICAN DAWN ANNUAL REPORT 2014

Application of principles in King III

As required by the JSE Listings Requirements, the following table discloses the status of Afdawn’s compliance with King III and reasons
for non-compliance, if applicable. Shareholders can access the company’s compliance with all 75 principles of the King Report on the
company’s website at the following address: www.afdawn.co.za under Investor Relations in the Corporate Governance folder.

1 – Not applied / will not be applied.
2 – In process / partially applied.
3 – Full application.

Ethical leadership and corporate citizenship 3
3
Effective leadership based on an effective ethical foundation 3
Responsible corporate citizen
Effective management of ethics

Board and directors 3
3
The board is the focal point for and custodian of corporate governance 3
Strategy, risk, performance and sustainability are inseparable 1x
Directors act in the best interest of the company 3
The chairman of the board is an independent non-executive director
A framework for the delegation of authority has been established .The board comprises a balance of power, 3
with a majority of non executive directors who are independent 3
Directors are appointed through a formal process 3
Formal induction and ongoing training of directors is conducted 3
The board is assisted by a competent, suitably qualified and experienced company secretary 3
Annual performance evaluations of the board, its committees and individual members 3
Appointment of well-structured committees 3
An agreed governance framework between the group and its subsidiary boards is in place 3
Directors and executives are fairly and responsibly remunerated 3
Remuneration of directors and prescribed officers is disclosed
The company’s remuneration policy is approved by the shareholders

x: The board is in the process of selecting an independent non-executive chairman.

Audit committee 3
3
Effective and independent 3
Suitably skilled and experienced independent non-executive directors 3
Chaired by an independent non-executive director 2x
Oversees integrated reporting 3
A combined assurance model is applied to improve efficiency in assurance activities 1#
Satisfies itself of the expertise, resources and experience of the company’s finance function 3
Oversees internal audit 3
Integral to the risk management process 3
Oversees the external audit process
Reports to the board and shareholders on how it has discharged its duties

x A combined assurance model is not fully implemented. The audit and risk committee does however place reliance on the inputs
of management and assurance from the external auditors. As indicated below, the Company does not have a separate internal
audit function.

#: See internal audit below.

18AFRICAN DAWN ANNUAL REPORT 2014

Application of principles in King III continued

Governance of risk 3
3
The board is responsible for the governance of risk 3
The board determines the levels of risk tolerance 3
The audit and risk management committee assists the board in carrying out its risk responsibilities
The board has delegated the process of risk management to management. The board ensures that risk assessments 3
are performed on a continual basis. Frameworks and methodologies are implemented to increase the probability of 1x
anticipating unpredictable risks 2#
The board ensures that management implements appropriate risk responses
The board receives assurance regarding the effectiveness of the risk management process
Sufficient risk disclosure to stakeholders

x: The Group has not complied with this principle in full due to not having an internal audit function. Reports from management to the
Board and audit committee provide a balanced assessment of the key risks facing the Group. The risk register is pivotal in this assessment.

#: The Board has disclosed and discharged its views and responsibility on the effectiveness of the Group’s risk management process in
the statement of responsibilities of directors in the Group’s annual integrated report and furthermore discloses the risks facing the
Group and the mitigating actions that will either reduce the probability or lessen the impact thereof.

Governance of information technology 3
3
The board is responsible for the governance of information technology (IT) 3
IT is aligned with the performance and sustainability objectives of the company 2x
Management is responsible for the implementation of an IT governance framework 3
The board monitors and evaluates significant IT investments and expenditure 3
IT is an integral part of the company’s risk management. IT assets are managed effectively 3
The audit and risk management committee assists the board in carrying out its IT responsibilities 3
Compliance with laws, rules, codes and standards
The board ensures that the company complies with applicable laws and considers adherence to non-binding rules, 3
codes and standards
The board and each individual director and senior manager has a working understanding of the effect of laws, rules, codes and 3
standards applicable to the company and its business 3
Compliance risk forms an integral part of the company’s risk management process
The implementation of an effective compliance framework and process has been delegated to management

x: The Board, through the audit committee, oversees the proper value delivery of IT and monitors that the expected return on investment
are derived and protected.

Internal audit 1x
1x
The board ensures that there is an effective risk-based internal audit 1x
Internal audit follows a risk-based approach to its plan
Internal audit provides a written assessment of the effectiveness of the company’s system of internal controls and 1x
risk management 1x
The audit committee is responsible for overseeing internal audit
Internal audit should be strategically positioned to achieve its objectives

x: Due to capital and resource constraints, the Company does not have a separate internal audit function. The oversight of internal control
remained with the audit committee and the required testing and investigation was performed in-house by competent financial staff
or external consultants as required. A separate internal audit division with qualified internal auditor will be formalized and implemented
in the near future. The internal audit tasks remain with the audit committee for time being until the internal audit department will
take responsibility of all internal audit matters.

19AFRICAN DAWN ANNUAL REPORT 2014

Application of principles in King III continued

Governing stakeholder relationships 3
3
The board appreciates that stakeholders’ perceptions affect the company’s reputation 3
Management proactively deals with stakeholder relationships 3
There is an appropriate balance between its various stakeholder groupings 3
Equitable treatment of shareholders 3
Transparent and effective communication with stakeholders
Disputes are resolved effectively, efficiently and as expeditiously as possible

Integrated reporting and disclosure 3
3
The board ensures the integrity of the company’s integrated report 1x
Sustainability reporting and disclosure should be integrated with the company’s financial reporting
Sustainability reporting and disclosure should be independently assured

x: The Board has decided that there would be no further third-party assurances in respect of the Group’s annual integrate report, other
than that of the independent auditors. The contents of the report have been reviewed by the audit committee and approved by
the Board.

The entire integrated report is reviewed by the audit and risk management committee and recommended to the board.

20AFRICAN DAWN ANNUAL REPORT 2014

Annual Financial Statements

For the year ended 28 February 2014

The reports and statements set out below comprise the financial statements
presented to the shareholders:

Index Page

Audit Committee Report 23
Directors Responsibilities and Approval 25
Company Secretary’s Certification 26
Independent Auditor’s Report 27
Directors’ Report 28
Statement of Financial Position 32
Statement of Comprehensive Income 33
Statement of Changes In Equity 34
Statements of Cash Flow 35
Accounting Policies 36
Notes to the Financial Statements 43

21

Annual Financial Statements

1. Level of assurance
These financial statements have been audited in compliance with international standards on auditing.
The preparation of the annual financial statements was supervised by:

EA van Heerden CA(SA)
Financial Director
2. Preparer

Dylan Kohler Professional Accountant (SA)
Consultant

22AFRICAN DAWN ANNUAL REPORT 2014

Audit Committee Report

1. Audit committee report

The Audit Committee has been constituted in accordance with the Companies Act and substantially adheres with the principles set out
in King III. The report from the Audit Committee as required by the Companies Act is set out below. From the outset the Committee
was chartered to re-establish the group’s creditability and effective operation, through sound control and compliance. In the period
under review the Committee has striven to uphold and improve upon the existing base with specific attention to risk management and
sustainability within the group.

Purpose

The main purpose of the Committee is to assist the Board in the oversight of:
• the integrity of the financial statements,
• the effectiveness of internal control over financial reporting,
• independence and qualification of the independent registered auditor,
• the company’s compliance with legal and regulatory requirements and
• the expertise of the financial director.

Composition of the Audit Committee

The members of the Audit Committee are all independent non executive directors of the group and include:

Name Qualification
Ms. HH Hickey (Chairman) CA(SA)
Ms. V Lessing
Mr. SM Roper CA(SA) (appointed on 22 April 2014)

The committee meetings were attended by invitees throughout the period. All directors were invited to attend the meetings. The
Financial Director was required to attend. The committee is satisfied that the members thereof have the required knowledge and
experience as set out in Section 94(5) of the Companies Act 71 of 2008 and Regulation 42 of the Companies Regulation, 2011.

Although Mr. CF Wiese was Chairman of the Board, it was decided that he should be a member of the Audit Committee as there are
only three independent non-executive directors and his contribution to this Committee was valuable. The regulations by the JSE in this
regard, were amended during the period and this had the effect that African Dawn Capital Limited became compliant. During the year
several changes were made to the Audit Committee. Ms. L Taylor and Mr. CF Wiese resigned on 29 May 2013 and 10 June 2013
respectively. Mr. JK van Zyl and Ms. V Lessing were appointed to the committee to fill the above vacancies. Subsequent to the year
end, Mr. SM Roper was appointed as member of the committee to replace Mr. JK van Zyl who became an executive director.

Ms. WN Luhabe was appointed to the audit committee during the financial year but resigned from her duties before any official meetings
of the Audit Committee took place.

The audit committee as at 28 February 2014 consisted of Ms. HH Hickey (Chair), Ms. V Lessing and Mr. JK van Zyl.

Meetings held by the Audit Committee

The Audit Committee performs the duties laid upon it by Section 94(7) of the Companies Act 71 of 2008 by holding meetings with
the key role players on a regular basis and by the unrestricted access granted to the external auditors. Afdawn Capital Limited held four
Audit Committee meetings during the period. The attendance of these meetings are set out below.

16 May 21 August 21 November 7 April
2013 2014
2013 2013
√ √
HH Hickey (Chairman) √ √√
CF Wiese √
L Taylor √A√
V Lessing √ √ √ √#
JK van Zyl √ √√
GE Stoop# √ √√√
WJ Groenewald # √√√
JS van der Merwe
# : Invitee A : Apology

23AFRICAN DAWN ANNUAL REPORT 2014

Audit Committee Report continued

External auditor
The Committee nominated Grant Thornton for reappointment as external auditors of the Afdawn group. The Committee satisfied itself
through enquiry that the external auditors, Grant Thornton and Mr EFG Dreyer, the designated auditor, are independent as defined by
the Companies Act and as per the standards stipulated by the auditing profession. The Audit Committee in consultation with executive
management, agreed to the terms of the engagement. The audit fee for the external audit has been considered and approved for the
2014 financial year end, taking into consideration such factors as the timing of the audit, the extent of the work required and the scope.
The Committee approved a non-audit services policy which determines the nature and extent of any non-audit services which Grant
Thornton may provide to the company. The policy allows for limited tax and corporate governance advice.
Financial statements
The Committee has evaluated the group financial statements for the year ended 28 February 2014 and, based on the information
provided to the committee considers that the group complies in all material respects, with the requirements of the Companies Act and
International Financial Reporting Standards (IFRS). The requirements of King III are continuously being assessed and improved on with
significant issues resolved.

Accounting practices and internal control
Based on the available and communicated information together with discussions with the independent external auditor, the committee
is satisfied that there was no material breakdown in the internal accounting controls during the financial year under review. The Committee
reviewed the auditor’s management letter and can report that there were no material issues requiring immediate additional attention.
The value added issues raised are receiving the appropriate attention to ensure increased effectiveness in all areas of financial and
business systems and controls.

Financial Director
On 10 April 2013, Mr. TF Kruger stepped down as Chief Executive Officer and was appointed as financial director on this date and
continued in this role until his resignation on 1 February 2014. Mr. EA van Heerden was appointed as Financial Director on 27 March
2014. The audit committee has assessed and is satisfied that the Financial Directors, have the appropriate skill, expertise and experience
as required by the JSE listings requirements 3.84(b).

Company Secretary
Mr. W Somerville (on behalf of William Somerville Governance Services cc) resigned as company secretary on 31 July 2014 and Mr. A
Rich (on behalf of Statucor Proprietary Limited) was appointed in his stead. In terms of paragraph 3.84 (i) and (j) of the JSE Listings
Requirements the board has satisfied itself that the company secretaries including the individual shareholders and directors of the juristic
person possess the appropriate expertise and experience required and considers him qualified to perform his duties in accordance with
applicable legislation and is fit and proper for the position. There is an arm’s-length relationship between itself and the company secretary
and he is not a director on the board.

On behalf of the audit committee.

Ms. HH Hickey
Chairman Audit Committee

24AFRICAN DAWN ANNUAL REPORT 2014

Directors’ Responsibilities and Approval

The directors are required in terms of the Companies Act 71 of 2008 to maintain adequate accounting records and are responsible for
the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility
to ensure that the annual financial statements fairly present the state of affairs of the group as at the end of the financial year and the
results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards. The
external auditors are engaged to express an independent opinion on the annual financial statements.

The audited annual financial statements are prepared in accordance with International Financial Reporting Standards and are based upon
appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the group
and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities,
the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards
include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate
segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the group and all employees are
required to maintain the highest ethical standards in ensuring the group’s business is conducted in a manner that in all reasonable
circumstances is above reproach. The focus of risk management in the group is on identifying, assessing, managing and monitoring
all known forms of risk across the group. While operating risk cannot be fully eliminated, the group endeavours to minimise it by
ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined
procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal
control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements.
However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement
or loss.

The directors have reviewed the group’s cash flow forecast for the year to 28 February 2015 and, in the light of this review and the
current financial position, they are satisfied that the group has or has access to adequate resources to continue in operational existence
for the foreseeable future.

The external auditors are responsible for independently auditing and reporting on the group's annual financial statements. The annual
financial statements have been examined by the group's external auditors and their report is presented on pages 38.

The annual financial statements set out on pages 32 to 77, which have been prepared on the going concern basis and the directors
report on pages 28 to 31, were approved by the board on 5 August 2014 and were signed on its behalf by:

Jacques Groenewald EA van Heerden CA(SA)
Acting Executive Chairman Financial Director

05 August 2014

25AFRICAN DAWN ANNUAL REPORT 2014

Company Secretary’s Certification

Declaration by the Company secretary in respect of Section 88(2)(e) of the Companies Act
In terms of Section 88(2)(e) of the Companies Act, I certify that, to the best of my knowledge and belief, African Dawn Capital Limited
has, in respect of the financial year ended 28 February 2014, lodged with Companies Intellectual Property Commission (CIPC) all returns
and notices required of a public company in terms of the Act and that all such returns and notices are true, correct and up to date.

Mr. Alun Rich
(on behalf of Statucor Proprietary Limited)
5 August 2014

26AFRICAN DAWN ANNUAL REPORT 2014

Independent Auditor’s Report

To the shareholders of African Dawn Capital Limited

We have audited the consolidated and separate financial statements of African Dawn Capital Limited set out on pages  32 to 77 which
comprise the statements of financial position as at 28 February 2014, and the statements of comprehensive income, statement of
changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting
policies and other explanatory information.

Directors' responsibility for the financial statements

The company's directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements
in accordance with International Financial Reporting Standards and the requirements of the Companies Act 71 of 2008 of South Africa
and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial
statements that are free from material misstatements, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are
free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate
financial position of African Dawn Capital Limited as at 28 February 2014, and its consolidated and separate financial performance and
consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the
requirements of the Companies Act 71 of 2008 of South Africa.

Other reports required by the Companies Act

As part of our audit of the consolidated and separate financial statements for the year ended 28 February 2014, we have read the
Directors' Report and the Audit and Risk Committee Reports for the purpose of identifying whether there are material inconsistencies
between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the
respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the
audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express
an opinion on these reports.

GRANT THORNTON
Chartered Accountants (SA)
Registered Auditors

EFG Dreyer
Partner
Chartered Accountant (SA)
Registered Auditor

5 August 2014

42 Wierda Road West
Wierda Valley
2196

27AFRICAN DAWN ANNUAL REPORT 2014

Directors’ Report

The directors have pleasure in submitting their report on the financial statements of African Dawn Capital Limited and the group for
the year ended 28 February 2014.

1. Review of activities
Main business and operations
Afdawn is an active investment holding company acquiring shareholdings in entrepreneurial companies, with strong innovation drive,
which are in a proven growth phase by enhancing the capabilities of these entities to accelerate long term sustainable growth.

The group through its wholly owned subsidiary Elite provides unsecured personal loans (micro finance).

Effective March 2014, the Company acquired 100% of the issued share capital of Knife Capital in order to have the intellectual capital,
capacity and capabilities to help execute its vision to become an active investment holding company.

2. Going concern
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes
that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.

The group reports a loss of R 19,8m (2013: R2,1million) for the period ended 28 February 2014. The group’s net asset value decreased
to R43,4m (2013: R63,3million) for the period ended 28 February 2014 due to the reported loss.

3. Events after the reporting period
3.1 Rights issue:
A detailed Circular on the rights issue was published and posted on 7 March 2014. The capital raising was completed on 4 April 2014
with final results as follows:
* Rights taken up under rights offer amounted to R 21,8 million (rights @ 8 cents per share).
* The total cost associated to the rights issue amounted to R 1,7 million.
Shares were issued as follows:
* Rights offer shares subscribed for: 222 086 442 (44% take up on available rights).
* Rights offer shares underwritten: 50 000 000 (10% take up on available rights).
* Total shares: 272 086 442.

3.2 Acquisition of Knife Capital
In terms of a SENS issued on 13 December 2013, the Company entered into an agreement to acquire the entire issued share capital of
Knife Capital for R10 000 000 by issuing 100 000 000 shares at 10c per share. The conditions underlying this acquisition were fulfilled
and reported on in terms of a SENS issued on 28 March 2014 and the shares were issued on 8 April 2014.

4. Authorised and issued share capital
The authorised ordinary share capital amounts to 5 000 000 000 par value shares. The issued share capital on 28 February 2014 amounted
to 508 184 155 shares. As a result of the rights issue, as detailed above , 272 086 442 new shares were issued on 4 April 2014 at 8c
per share, including shares paid in terms of the rights offer underwriting agreement as detailed in the circular dated 7 March 2014. The
cash generated from the rights issue and guaranteed underwriting allocations amounted to R21,8 million. As a result of the acquisition
of Knife Capital , as detailed per paragraph 11 below, a further 100 000 000 shares were issued at 10c per share on 8 April 2014 in
exchange for shares in Knife Capital. The number of shares in issue following the conclusion of the rights issue and the Knife Capital
acquisition and as at the date of this Directors' Report is 880 270 597.

Treasury shares - The Company currently holds 3 268 000 treasury shares in its own name which shall be cancelled.

5. Borrowing limitations
In terms of the Memorandum of Incorporation of the company, the directors may exercise all the powers of the company to borrow
money, as they consider appropriate.

28AFRICAN DAWN ANNUAL REPORT 2014

Directors’ Report continued

6. Settlement of the National Housing Finance Corporation (“NHFC”)
In terms of the settlement agreement with the NHFC that was signed on 30 May 2011, Nexus Personnel Finance’s (“Nexus”) (a wholly
owned subsidiary of Afdawn) facility of R5 million became payable in October 2013. Nexus is currently negotiating extending the terms
with the NHFC.

7. Dividends
No dividends were declared or paid to shareholders' during the period.

8. SARS liability
Afdawn continues to work closely with SARS on all aspects relating to its tax position in terms of the agreed action plan with SARS.
Documentation as set out in Section 200 of the Income Tax Act, which enables companies to settle their tax obligations with SARS,
has been submitted and queries raised by SARS answered. Afdawn has vigorously explored and consulted with various independent tax
experts to ensure that a beneficial outcome for Afdawn could be achieved. The SARS liability has been fully provided for in our accounts
with regards to returns that have been assessed, disagreements were provided for to the extent of the most likely outcome.

9. Directorate
The directors in office at the date of this report are as follows:

Director Office Designation Changes
Executive xx
WJ Groenewald Chief Executive Officer (CEO)
and Acting Chairman Executive Appointed 27 March 2014
EA van Heerden
A Böhmert Finance Director
K van Zyl
V Lessing Executive Appointed 22 April 2014

Executive xxx Appointed 29 May 2013

Independent Appointed 29 May 2013
Non-executive

HH Hickey Chair Audit Committee Independent
Non-executive

SM Roper Independent Appointed 22 April 2014
Non-executive

JS van der Merwe Chairperson Non-executive x Appointed 10 April 2013 and
resigned on 2 June 2014

TF Kruger Finance Director Executive Resigned on 1 February 2014
WN Luhabe Appointed 29 May 2013 and
Independent resigned on 30 September 2013
GE Stoop Non-executive Resigned on 5 November 2013
L Taylor Resigned on 29 May 2013
Executive
CF Wiese Resigned on 10 June 2013
Independent
Non-executive

Independent
Non-executive

x Changed from executive to non-executive on 24 February 2014.
xx Changed from non- executive to acting CEO on 24 February 2014, to CEO on 28 March 2014 and to acting Chairman

on 2 June 2014.
xxx Changed from Non-executive to Executive on 28 March 2014.

29AFRICAN DAWN ANNUAL REPORT 2014

Directors’ Report continued

10. Secretary

The company secretary at the year end is Mr. W Somerville (on behalf of William Somerville Governance Services cc) of:
Business address:
56 5th Avenue
Melville
Johannesburg
2092

Mr. W Somerville resigned as company secretary on 31 July 2014 and Mr. A Rich (on behalf of Statucor Proprietary Limited) was appointed
in his stead. Mr. A Rich is of:
2nd Floor
Block D
The Boulevard Office Park
Searle Street
Woodstock
7925

11. Material transactions

Rights issue:
A detailed Circular on the rights issue was published and posted on 7 March 2014. The capital raising was completed on 4 April 2014
with final results as follows:
• Rights taken up under rights offer amounted to R 21,8 million (rights @ 8 cents per share).
• The total cost associated to the rights issue amounted to R 1,7 million.

Shares were issued as follows:
• Rights offer shares subscribed for: 222 086 442 (44% take up on available rights).
• Rights offer shares underwritten: 50 000 000 (10% take up on available rights).
• Total shares: 272 086 442.

Acquisition of Knife Capital:

The company acquired 100% of the issued share capital of Knife Capital (Pty) Ltd (“Knife Capital”) on 8 April 2014 by issuing
100 000 000 ordinary shares at 10c per share. The acquisition was undertaken to add the capacity, skills, experience and intellectual
property required to implement the new vision of the company.

12. Allegro Holdings Proprietary Limited ("Allegro")

Afdawn previously concluded a Memorandum of Understanding (28 February 2013) which will facilitate an amicable conclusion to the
matter. Progress has been slow in this regard. Thus far the company has not become aware of any information during its deliberations
that will alter our conclusion reached previously. To the date of signing this report no claims have been received by Afdawn, nor have
we been able to establish any basis for a potential claim against Afdawn and therefore no provisions have been made for any such
contingency.

13. Special resolutions

The special resolutions set out below were passed at the Annual General Meeting ("AGM") held on 15 October 2013 and the general
meeting on 21 January 2014. All special resolutions were accepted and passed. Since the date of the last Directors report no material
special resolutions were passed by any of the subsidiaries.

Annual General Meeting - 15 October 2013:
* General authority to repurchase shares
* Approval of non-executive directors’ remuneration
* Financial assistance to related or inter-related companies within the group

General Meeting - 21 January 2014

* Authority to issue the Knife Capital (Pty) Ltd acquisition shares and the rights offer shares.

30AFRICAN DAWN ANNUAL REPORT 2014

Directors’ Report continued

14. Auditors
Grant Thornton will continue in office in accordance with the Companies Act.

15. Registered Office

The company's registered office is:
2nd Floor
Waterfront Terraces
Tygervalley Waterfront
7530

16. Directors' interests in shares

As at 28 February 2014, the directors of the company held direct and indirect beneficial interests in the company as indicated per the
table below:

2014 Direct Indirect Total % Held
158 100 25 172 959 25 331 059 5.0%
WJ Groenewald 11 428 572 11 428 572 2.2%
JS van der Merwe # - 36 601 531 36 759 631 7.2%
Total 158 100

2013 Direct Indirect Total % Held
TF Kruger x 22 032 800 - 22 032 800 4.3%
WJ Groenewald 25 331 059 5.0%
Total 158 100 25 172 959 47 363 859 9.3%
22 190 900 25 172 959

x : Resigned as director on 1 February 2014
# : Resigned as director on 2 June 2014

At the date of this report, the directors of the company held direct and indirect beneficial interests in the company as indicated per
the table below:

2014 Direct Indirect Total % Held
WJ Groenewald 158 100 46 044 387 46 202 487 5.2%
JK van Zyl 33 333 333 33 333 333 3.8%
EA van Heerden 33 333 333 - 33 333 333 3.8%
A Böhmert 35 833 333 - 35 833 333 4.1%
Total 102 658 099 - 148 702 486
46 044 387 16.9%

31AFRICAN DAWN ANNUAL REPORT 2014

Statement of Financial Position as at 28 February 2014

Group Company

2014 2013 2014 2013

Note(s) R '000 R '000 R '000 R '000

Assets

Non-Current Assets

Property, plant and equipment 3 92 899 85 134
- -
Intangible assests 4 - 1,792
5,279 8,601
Investments in subsidiaries 5-- - -

Other financial assets 7 - 638 5,364 8,735

92 3,329 - -
46,473 49,022
Current Assets
- -
Properties in possession 10 24,748 21,335 - -
2,151 2,697
Loans to group companies 6-- 397 320
49,021 52,039
Other financial assets 7 - 300 3,322 -
57,707 60,774
Current tax receivable 18 95 95

Trade and other receivables 11 19,497 83,340

Cash and cash equivalents 12 1,084 9,014

45,424 114,084

Non-current assets held for sale and assets of disposal groups 13 59,766 4,129

Total Assets 105,282 121,542

Equity and Liabilities 14 284,634 284,634 284,634 284,634
Equity
Share capital (241,223) (221,383) (247,939) (244,108)
Accumulated loss

43,411 63,251 36,695 40,526

Liabilities 16 8,844 22,366 - 1,621
Non-Current Liabilities --
Borrowings 17 - 316 - 1,621
Finance lease obligation

8,844 22,682

Current Liabilities 6-- 6,943 6,958
Loans from group companies 1,663 -
Borrowings 16 7,893 7,292 6,728
Current tax payable 6,728
Finance lease obligation 18 18,226 18,709 - -
Operating lease liability 174
Trade and other payables 17 - 77 5,504 195
Bank overdraft 4,746
9 174 195 -
Liabilities of disposal groups 21,012 -
Total Liabilities 19 6,198 9,336 18,627
Total Equity and Liabilities -
12 1 - 21,012 -
57,707 20,248
32,492 35,609 60,774

13 20,535 -

61,871 58,291

105,282 121,542

32AFRICAN DAWN ANNUAL REPORT 2014

Statement of Comprehensive Income

Group Company

2014 2013 2014 2013

Note(s) R '000 R '000 R '000 R '000
21
Continuing operations 22 6,079 6,458 361 752
Revenue 23 - 142 - -
Cost of sales 24
Gross profit 25 6,079 6,600 361 752
Other income 26 34 570 14 743
Operating expenses 38 (6,815)
Operating profit (loss) (21,474) (10,655) (4,028) (5,320)
Investment revenue 29 (15,361) (3,485) (3,653)
Loss on non-current assets held for sale 29 96
Finance costs 29 77 553 7 -
Loss before taxation 29 (311) - -
Taxation 29 (1,124) (185) (162)
(Loss) Profit from continuing operations 29 (16,719) (1,175) (3,831) (5,386)
Discontinued operations (407) (4,107) -
(Loss) Profit from discontinued operations (17,126) (3,831) -
Loss for the year (166) (5,386)
Other comprehensive income (2,714) (4,273) -
Total comprehensive loss for the year (19,840) (3,831) -
2,163 (5,386)
Attributable to: - (2,110) -
(19,840) (3,831) -
Owners of the parent: - (5,386)
Continuing operations (2,110)
Discontinued operations
Loss for the year attributable to owners of the parent (17,126) (4,273) (3,831) (5,386)
(2,714) 2,163 - -
Earnings per share
(19,840) (2,110) (3,831) (5,386)
From continuing and discontinuing operations
Basic loss per share (c) (3.90) (0.41) --
Diluted loss per share (c) (3.90) (0.28) --

From continuing operations (3.37) (0.83) --
Basic loss per share (c) (3.37) (0.84) --
Diluted loss per share (c)
(0.53) 0.42 --
From discontinued operations (0.53) 0.56 --
Basic (loss) earnings per share (c)
Diluted (loss) earnings per share (c)

33AFRICAN DAWN ANNUAL REPORT 2014

Statement of Change in Equity

Share Share Total Share Non- Accumulated Total
Capital Premium equity
Capital Distributable loss
R '000 R '000 R '000
Reserve

R '000 R '000 R '000

Group 5,074 279,560 284,634 97 (219,370) 65,361
Balance at 01 March 2012 - - -
Loss for the year - - - - (2,110) (2,110)
Other comprehensive income - - -
Total comprehensive loss for the year - - - - --
Transfer from insurance reserve - - -
Total movement - (2,110) (2,110)
Balance at 01 March 2013 5,074 279,560 284,634
Loss for the year - - - (97) 97 -
Other comprehensive income - - -
Total comprehensive loss for the year - - - (97) 97 -
Balance at 28 February 2014
Note(s) 5,074 279,560 284,634 - (221,383) 63,251
14 14 14
Company - (19,840) (19,840)
Balance at 01 March 2012
Loss for the year - --
Other comprehensive income
Total comprehensive loss for the year - (19,840) (19,840)
Balance at 01 March 2013
Loss for the year - (241,223) 43,411
Other comprehensive income
Total comprehensive Loss for the year 5,074 279,560 284,634 - (238,722) 45,912
Balance at 28 February 2014 - - - - (5,386) (5,386)
Note(s) - - - --
- - - - (5,386) -
- (244,108) (5,386)
5,074 279,560 284,634 - (3,831) 40,526
- - - -- (3,831)
- - - - (3,831)
- - - - (247,939) -
(3,831)
5,074 279,560 284,634 36,695
14 14 14

34AFRICAN DAWN ANNUAL REPORT 2014

Statement of Cash Flows

Group Company

2014 2013 2014 2013

Note(s) R '000 R '000 R '000 R '000
30
Cash flows from operating activities 31 (1,841) (15,415) (5,167) (6,190)
3 77 620 7 96
Cash used in operations 3
Interest income 4 (1,124) (1,485) (185) (162)
Finance costs (409) 7,636 - -
Tax (paid) / received 12 2,624 - -
Cash flows of held for sale / discontinued operations (1,169)
Net cash from operating activities (6,020) (5,345) (6,256)
(4,466)
Cash inflows/(outflows) from investing activities
- (696) - (67)
Purchase of property, plant and equipment 2 55 4 30
Sale of property, plant and equipment 398 - - -
Proceeds on sale of non-current asset held for sale - - -
Purchase of other intangible assets - (1,802) 5,376
Proceeds from loans from group companies (1,793) - - 1,423
Discontinued operations (1,393) - 5,380 -
Net cash from investing activities
(2,443) 1,386
Cash flows from financing activities
(1,056) 1,783 42 (32)
Repayments / (proceeds) of borrowings - 340 --
Finance lease payments - (97) --
Transfer from insurance reserve - --
Discontinued operations 4,966
Net cash from financing activities 3,910 2,026 42 (32)

Total cash movement for the year (1,949) (6,437) 77 (4,902)
Cash at the beginning of the year 9,014 15,451 320 5,222
Cash classified as held for sale
Total cash at end of the year (5,982) - --
1,083 9,014 397 320

35AFRICAN DAWN ANNUAL REPORT 2014

Accounting Policies

1. Presentation of Financial Statements

The consolidated and separate annual financial statements have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), the requirements of the Companies Act, the JSE Listings Requirements, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Board and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council.
The consolidated and separate financial statements are prepared in accordance with the going concern principle under the historical
cost basis, other than financial instruments. The accounting policies have been consistently applied throughout the group and for all
the years presented unless otherwise stated.

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 Group's accounting policies. The areas involving a high degree of
judgement, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 34.

1.1 Segmental reporting

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 the performance of the operating segments,
has been identified as the executive management committee that makes strategic decisions. As the internal reporting is not done
geographically and there is no significant geographic split in the business, the segments are indicated in operational segments only.

1.2 Consolidation

Basis of consolidation

Subsidiaries are all entities (including special purpose entities) over which the Group has the power over the investee and exposure, or
rights to variable returns from its involvement with the investee and the ability to use it's power over the investee to affect the amount
of the investor's returns.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. The results of subsidiaries acquired or
disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition
to the effective date of disposal, as appropriate. Subsidiaries are de-consolidated from the date that control ceases.

The Group uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition is measured,
as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.
The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in
the statement of comprehensive income.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of impairment of the asset transferred.

1.3 Discontinued operations

A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale, and; represents
a separate major line of business or geographical area of operations; is part of a single co-ordinated plan to dispose of a separate major
line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale.

The profit or loss from discontinued operations, including prior year's components of profit or loss, is presented in a single amount in
the statement of comprehensive income. For further analysis of the discontinued operation and disposal, refer to note 13 and note 38.

1.4 Property, plant and equipment

Property, plant and equipment is carried at historical cost less accumulated depreciation and any accumulating impairment losses.

All fixed assets are shown at cost, less subsequent depreciation and impairment, except for land, which is shown at cost less impairment.
Cost includes expenditure that is directly attributable to the acquisition of the items and the cost to bring it into use.

Items of property, plant, and equipment are recognised as assets when it is probable that the future economic benefits associated with
the asset will flow to the entity, and the cost of the asset can be measured reliably.

36AFRICAN DAWN ANNUAL REPORT 2014

Accounting Policies continued

1.4 Property, plant and equipment continued

This recognition principle is applied to all property, plant, and equipment costs at the time they are incurred. These costs include costs
incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace
part of, or service it.

All other repairs and maintenance expenditures are charged to the statement of comprehensive income during the financial period in
which they are incurred.

Depreciation is calculated using the straight line method to allocate the cost of each asset to its residual value over its estimated useful
life as follows:

Item Average useful life

Furniture and fixtures 4 - 6 years

Motor vehicles 5 years

Office equipment 3 -5 years

IT equipment 3 -5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An assetís carrying amount
is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Capitalised leased assets are depreciated at the shorter of the useful life or the period of the lease.

Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the
statement of comprehensive income.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.
Assets which the (company/group) holds for rentals to others and subsequently routinely sell as part of the ordinary course of activities,
are transferred to inventories when the rentals end and the assets are available-for-sale. These assets are not accounted for as non-
current assets held for sale. Proceeds from sales of these assets are recognised as revenue. All cash flows on these assets are included
in cash flows from operating activities in the cash flow statement.

1.5 Intangible assets

Computer Software

Computer software is carried at cost less accumulated amortisation and impairment losses. Costs associated with maintaining computer
software programmes are recognised as an expense as incurred.

Costs to acquire the computer software licenses for development purposes are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software.

Cost associated with computer software development (software development employee costs, developers consulting fees and an
appropriate portion of relevant overheads) activities that are directly associated with the production of identifiable and unique software
products are considered for capitalisation as intangible asset, if the following criteria are met;

If development costs can be measured reliably, completion of the development of the software is technically and commercially feasible,
the Group can demonstrate that the intangible asset will be used to generate future economic benefits, the Group intends to and has sufficient
resources to complete development and to use the asset, and the Group can demonstrate the ability to use or sell the intangible asset.

Other development expenditure which does not meet the above requirements is recognised in the profit and loss component of the
statement of comprehensive income.

The assetís useful lives are annually reviewed and adjusted where appropriate.

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:

Item Average useful life

Micro Finance Software 5 years

Medical Finance Software 5 years

37AFRICAN DAWN ANNUAL REPORT 2014

Accounting Policies continued

1.6 Properties 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. 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. Any subsequent write down of the acquired property to net realisable value
is recognised in profit/(loss). Any subsequent increase in the net realisable value, to the extent that it does not exceed the cumulative
write down, is also recognised in profit/(loss). Gains or losses on disposal of repossessed properties are reported in other operating
income or operating expenditure.

1.7 Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale, if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal
group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected
to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets held for sale (or disposal group) are measured at the lower of their carrying amount and fair value less costs to sell.
A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part of a disposal group classified
as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale are recognised in
profit or loss.

1.8 Financial instruments

Initial recognition and measurement

Initial recognition and measurement of financial instruments

Financial instruments are recognised initially when the Group becomes a party to the contractual provisions of the instruments. The
Group classifies financial instruments on initial recognition as a financial asset, a financial liability or an equity instrument in accordance
with the substance of the contractual arrangement

Financial instruments are measured initially at fair value. For financial instruments which are not at fair value through profit or loss,
transaction costs are included in the initial measurement of the instrument. Transaction costs on financial instruments are recognised
at fair value through profit or loss.

Classification and subsequent measurement

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are
classified into the following categories upon initial recognition:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. After initial
recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. The Group's cash
and cash equivalents, trade and most other receivables fall into this category of financial instruments. They are included in current assets,
except for maturities greater than 12 months after the period end date, these are classified as non-current assets on the face of statement
of financial position.

Classification and subsequent measurement of financial liabilities

Financial liabilities at amortised cost

Liabilities held at amortised cost are recognised initially at fair value and are subsequently stated at amortised cost using the effective
interest rate method. Any differences (other than transaction charges) between net proceeds and the redemption value are recognised
in the statement of comprehensive income over the period of the borrowing using the effective yield method.

38AFRICAN DAWN ANNUAL REPORT 2014

Accounting Policies continued

1.8 Financial instruments continued

Other financial liabilities

Included within this class of financial liabilities are trade and other payables, provisions and group loans payable that will be settled in
cash and cash equivalents. Trade and other payables and group loans payable are recognised initially at fair value and are subsequently
stated at amortised cost using the effective interest rate method.

Compound financial liabilities

If the terms of convertible instruments that give rise to a non-derivative instrument containing both the liability and equity component,
they are treated as compounded financial instruments. The liability component of a compound financial instrument is recognised initially
at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially as
the difference between the fair value of the compound financial instrument in its totality and the fair value of the liability component.
Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying
amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost
using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial
recognition, only derecognised on conversion or settlement.

De-recognition of financial assets and liabilities

Financial assets are derecognised when the contractual rights to the cash flow from the financial asset expire, or when the financial
asset and substantial risk and rewards are transferred. The financial liabilities are derecognised when it is extinguished, discharged,
cancelled or expires.

Impairment of financial assets

All financial assets, except for those at fair value through profit and loss, are subject to review for impairment at least at each reporting
date to identify whether there is any objective evidence that the financial assets or group of financial assets are impaired. The different
criteria to determine the impairment is for each asset class as follows; (for details see note 34). Loans and receivables: Individually
significant receivables are considered for impairment when they are past due or when other objective evidence is received that the
specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment.

Held-to-maturity investments: If there is objective evidence that the investment is impaired, determined by reference to external credit
ratings, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the
investment, including impairment losses are recognized in profit and loss. Available-for-sale financial assets: If the fair value cannot be
estimated reliably the impairment charges are recognised in profit or loss. All other available-for-sale assets are measured at fair value.
Gains and losses from movement in fair value is recognised in other comprehensive income and reported as being available for sale
reserves in equity.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to
set off the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred loan income reduces the outstanding loans and receivables balance on the basis that the revenue will be recognised over the
terms of the loans.

1.9 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at cost. Cash and cash equivalents comprise cash on
hand, deposits held on call with banks, other short term, highly liquid investments with original maturities of three months or less and
bank overdrafts.

39AFRICAN DAWN ANNUAL REPORT 2014

Accounting Policies continued

1.10 Significant judgements and sources of estimation uncertainty

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts represented
in the financial statements and related disclosures. Use of available information and the application of judgement is inherent in the
formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements.
Significant judgements include:
Impairment on trade and other receivables

The estimation of allowances for impairments is inherently uncertain and depends on many factors. These factors include general
economic conditions, structural changes within industries, changes in individual customer circumstances. There are also other external
factors such as legal requirements, regulatory specifications and governmental policies that if changes can have a significant effect on
the allowances.

Trade and other receivables are stated net of impairments. The impairments are either made on an individual receivable or on a
collective receivable.

Impairment on collective receivables

Trade and other receivables are considered impaired if, and only if, there is objective evidence of impairment as a result of events that
occurred after initial asset recognition. The event would be the loss making event and would adversely affect the recoverability and
reliability of the expected future cashflows. These events include, but are not limited to:
Breach of contract: default or delinquency in interest or principal payments, instalment past due date is considered a breach of contract
and would affect the reliability to measure future cash flows; Significant financial difficulty of borrower, directly communicated to African
Dawn Capital Limited or probable that borrower will enter bankruptcy or financial re-organisation.

Data indicating that there is a quantifiable decrease in the estimated future cash flow and recoverability of a grouping of assets, although
not yet identified at individual asset. These include fraud at agent levels, adverse change of payment status of groups, local and national
conditions relating to identifiable groups. Indication of decrease in value of security held, especially indicators that would adversely affect
the value of properties held as security relating to property bridging finance.

The Group formally assesses its receivable portfolio for impairment on a monthly basis based on formulated impairment formulas
and judgement. The extent to which the current carrying value exceeds the estimated recoverable amount of advances is classified
as impairment.

Impairments made on individual receivables

Substantial receivables, especially relating to property bridging transactions are assessed on an individual basis. The impairments are
calculated, based on an approved impairment policy. The impairments were made on judgements and formulated calculations. The
impairments were made by taking the following into consideration for each receivable: credibility of borrower, security held, value of
security, repayment history, sureties signed and agreed settlement terms. The individual receivable values are assessed to be at least
the security value that can be realised within 3 month in an active market.

Impairments made on collective receivables

Due to the vast number and ever changing status of especially short term, unsecured receivables, the impairments are assessed on
a collective grouping of receivables. The impairments are calculated, based on an approved impairment policy. The grouping of
the receivables are made based on specific criteria of each receivable, these include: borrower creditability, ageing of last receipt,
arrears amount, settlement agreement, status of process to be followed to pursue future cashflows, age of borrower, economical
status, repayment instalment. The collective receivable balances are impaired by a percentage that is specifically awarded to the
receivables within the collection. The percentage was developed with help of specialised external asset valuators and was based on
extensive market knowledge, historical default and recovery rates, repayment trends and statistical techniques. Impairment
calculations contain both judgemental and non-judgemental inputs. The extent of judgement utilised in new products is greater than
that for older products, given the limited historical experience available for the new products. Receivables older than 90 days become
collectable under the legal process of recovery, these receivables fall within a new collection of receivables and approved impairment
percentage applied.

40AFRICAN DAWN ANNUAL REPORT 2014

Accounting Policies continued

1.10 Significant judgements and sources of estimation uncertainty continued

Impairment testing

The recoverable amounts of cash generating units and individual assets are determined based on the higher of value in use calculations
and fair values less costs to sell. These calculations require the use of estimates and assumptions. The Group reviews and tests the
carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are
grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there
are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets.

Loan write-offs

The outstanding balances (net of amount owed and related impairment) of clients are continuously followed up and assessed for
successful repayment. Credit managers have the mandate to write balances off once all avenues for collections have been explored and
found to be unsuccessful.

1.11 Share capital, reserves, treasury shares and dividends

Ordinary shares are classified as equity. Share capital represents the nominal value of shares issued. Share premium includes any premiums
received on the issue of share capital. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares, or for the acquisition of a business,
are included in the cost of acquisition as part of the purchase consideration.

Other components of equity includes:

Insurance reserves - Contractual percentage of received insurance premiums kept as reserve.
Convertible instrument reserve - Equity portion of compounded financial instrument (Convertible Bonds).

Any dividend distribution payable to equity shareholders is included in other liabilities when the dividends have been approved prior to
the reporting date.

1.12 Tax

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current
and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from)
the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities

Deferred income tax is provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable
profit nor loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of
the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Withholding tax

Prior to 1 April 2012, distributions of dividends was subject to secondary tax on companies (STC), this expense was per the applicable
tax law and was disclosed as part of the tax expense in the income statement.

Subsequent to 1 April 2012, STC was replaced by a withholding tax on the declaration of dividends or deemed dividends (as defined in
the tax act). The new withholding tax is not a tax for the company.

41AFRICAN DAWN ANNUAL REPORT 2014

Accounting Policies continued

1.13 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified
as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Finance leases - lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the
leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in
the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum
lease payments, is the interest rate implicit in the lease. The lease payments are apportioned between the finance charge and reduction
of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic
rate on the remaining balance of the liability.

Operating leases - lessor

Assets leased to third parties under operating leases are included in property, plant and equipment in the statement of financial position.
They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental
income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term.

Operating leases - lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts
recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.

1.14 Revenue

Revenue recognition comprises the fair value of the received or receivable consideration for the rendering of services, net of value added
tax after eliminating sales within the Group. Revenue is recognised if it is probable that there are future economic benefits that will
flow to the Group and can be reliably measured.

Sales of services

Sales of services are recognised in the accounting period in which the services are rendered, by reference to stage of completion of the
specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

Interest income

Interest income is recognised on a time proportion basis using the effective interest method. The effective interest method is a method
of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense
over the relevant period of the asset or liability. The effective interest rate is the rate that discounts the estimated future cash payments
or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount on
initial recognition. When calculating the effective interest rate, the Group estimates the cash flows considering all contractual terms
of the financial instrument, but does not consider future credit losses. The calculation includes all fees paid or received between parties
to the contract that are an integral part of the effective interest rate.

When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount - being the estimated future cash
flow discounted at original effective interest rate of the instrument - and continues unwinding the discount as interest income. Interest
income on impaired loans is recognised either as cash is collected or on a cost recovery basis as conditions warrant.

Rental revenue

The initial amount of revenue agreed in the contract and any variations in the contract to the extent that it is probable that they will
result in revenue and they are capable of being reliably measured.

1.15 Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit
or loss attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares in issue during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary equity holders and the weighted average number of
ordinary shares in issue for the effects of all dilutive potential ordinary shares, which comprise convertible notes.

42AFRICAN DAWN ANNUAL REPORT 2014

Notes to the Financial Statements

2. New Standards and Interpretations
2.1 Standards and interpretations effective and adopted in the current year
In the current year, the group has adopted the following standards and interpretations that are effective for the current financial year
and that are relevant to its operations:
IFRS 10 Consolidated Financial Statements
Standard replaces the consolidation sections of IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation ñ
Special Purpose Entities. The standard sets out a new definition of control, which exists only when an entity is exposed to, or has rights
to, variable returns from its involvement with the entity, and has the ability to effect those returns through power over the investee.

The effective date of the standard is for years beginning on or after 1 January 2013.

The group has adopted the standard for the first time in the 2014 financial statements.

The adoption of this standard has not had a material impact on the results of the company, but has resulted in more disclosure than
would have previously been provided in the financial statements.

IFRS 11 Joint Arrangements
The standard replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities - Non Monetary Contributions by Venturers.
The standard defines a Joint arrangement as existing only when decisions about relevant activities requires the unanimous consent of
the parties sharing joint control in terms of a contractual arrangement. The standard identifies two types of joint arrangements as:
• Joint operations which exist when the entities sharing joint control have direct rights to the assets and obligations for the liabilities

of the joint arrangements. In such cases the joint operators recognise their share of the assets and liabilities and profits and losses
of the joint arrangements in their financial statements.

The effective date of the standard is for years beginning on or after 1 January 2013.

The group has adopted the standard for the first time in the 2014 financial statements.

The impact of the standard is not material.

IFRS 12 Disclosure of Interests in Other Entities
The standard sets out disclosure requirements for investments in Subsidiaries, associates, joint ventures and unconsolidated structured
entities. The disclosures are aimed to provide information about the significance and exposure to risks of such interests. The most
significant impact is the disclosure requirement for unconsolidated structured entities or off balance sheet vehicles.

The effective date of the standard is for years beginning on or after 1 January 2013.

The group has adopted the standard for the first time in the 2014 financial statements.

The adoption of this standard has not had a material impact on the results of the company, but has resulted in more disclosure than
would have previously been provided in the financial statements.

IFRS 13 Fair Value Measurement
New standard setting out guidance on the measurement and disclosure of items measured at fair value or required to be disclosed at
fair value in terms of other IFRSís.

The effective date of the standard is for years beginning on or after 1 January 2013.

The group has adopted the standard for the first time in the 2014 financial statements.

The impact of the standard is not material.

43AFRICAN DAWN ANNUAL REPORT 2014

Notes to the Financial Statements

2. New Standards and Interpretations continued
IAS 1 Presentation of Financial Statements
The amendment now requires items of other comprehensive income to be presented as:
• Those which will be reclassified to profit or loss
• Those which will not be reclassified to profit or loss.

The related tax disclosures are also required to follow the presentation allocation.

In addition, the amendment changed the name of the statement of comprehensive income to the statement of profit or loss and other
comprehensive income.

The effective date of the amendment is for years beginning on or after 1 July 2012.

The group has adopted the amendment for the first time in the 2014 financial statements.

The adoption of this amendment has not had a material impact on the results of the company, but has resulted in more disclosure than
would have previously been provided in the financial statements.

Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)
Amendment requires additional disclosures for financial assets and liabilities which are offset and for financial instruments subject to
master netting arrangements.

The effective date of the amendment is for years beginning on or after 1 January 2013.

The group has adopted the amendment for the first time in the 2014 financial statements.

The adoption of this amendment has not had a material impact on the results of the company, but has resulted in more disclosure than
would have previously been provided in the financial statements.

IAS 1 - Annual Improvements for 2009 - 2011 cycle
Clarification is provided on the requirements for comparative information. Specifically, if a retrospective restatement is made, a
retrospective change in accounting policy or a reclassification, the statement of financial position at the beginning of the previous period
is only required if the impact on the beginning of the previous period is material. Related notes are not required, other than disclosure
of specified information.

The effective date of the amendment is for years beginning on or after 1 January 2013.

The group has adopted the amendment for the first time in the 2014 financial statements.

The adoption of this amendment has not had a material impact on the results of the company, but has resulted in more disclosure than
would have previously been provided in the financial statements.

IAS 32 - Annual Improvements for 2009 - 2011 cycle
Tax effects of distributions made to holders of equity instruments. Income tax relating to distributions made to holders of equity
instruments and tax effects of transaction costs of equity transactions must be accounted for in accordance with IAS 12 Income Taxes.
The effective date of the amendment is for years beginning on or after 1 January 2013.

The group has adopted the amendment for the first time in the 2014 financial statements.

The adoption of this amendment has not had a material impact on the results of the company, but has resulted in more disclosure than
would have previously been provided in the financial statements.

44AFRICAN DAWN ANNUAL REPORT 2014

Notes to the Financial Statements

2. New Standards and Interpretations continued

2.2 Standards and interpretations not yet effective

The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory
for the groupís accounting periods beginning on or after 1 March 2014 or later periods:
IFRS 9 Financial Instruments

This new standard is the first phase of a three phase project to replace IAS 39 Financial Instruments: Recognition and Measurement.
To date, the standard includes chapters for classification, measurement and derecognition of financial assets and liabilities. The following
are main changes from IAS 39:
• Financial assets will be categorised as those subsequently measured at fair value or at amortised cost.
• Financial assets at amortised cost are those financial assets where the business model for managing the assets is to hold the assets

to collect contractual cash flows (where the contractual cash flows represent payments of principal and interest only). All other
financial assets are to be subsequently measured at fair value.
• Under certain circumstances, financial assets may be designated as at fair value.
• For hybrid contracts, where the host contract is an asset within the scope of IFRS 9, then the whole instrument is classified in
accordance with IFRS 9, without separation of the embedded derivative. In other circumstances, the provisions of IAS 39 still apply.
• Voluntary reclassification of financial assets is prohibited. Financial assets shall be reclassified if the entity changes its business model
for the management of financial assets. In such circumstances, reclassification takes place prospectively from the beginning of the
first reporting period after the date of change of the business model.
• Financial liabilities shall not be reclassified.
• Investments in equity instruments may be measured at fair value through other comprehensive income. When such an election is
made, it may not subsequently be revoked, and gains or losses accumulated in equity are not recycled to profit or loss on derecognition
of the investment. The election may be made per individual investment.
• IFRS 9 does not allow for investments in equity instruments to be measured at cost.
• The classification categories for financial liabilities remains unchanged. However, where a financial liability is designated as at fair
value through profit or loss, the change in fair value attributable to changes in the liabilities credit risk shall be presented in other
comprehensive income. This excludes situations where such presentation will create or enlarge an accounting mismatch, in which
case, the full fair value adjustment shall be recognised in profit or loss.

The effective date of the standard is for years beginning on or after 01 January 2018.

The group expects to adopt the standard for the first time in the 2019 financial statements.
The impact of this standard is currently being assessed.

IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets

The amendment brings the disclosures for impaired assets whose recoverable amount is fair value less costs to sell in line with the
disclosure requirements of IFRS 13 Fair Value Measurements.

The effective date of the amendment is for years beginning on or after 1 January 2014.

The group expects to adopt the amendment for the first time in the 2015 financial statements.

It is unlikely that the amendment will have a material impact on the company's financial statements.

45AFRICAN DAWN ANNUAL REPORT 2014

Notes to the Financial Statements

2. New Standards and Interpretations continued
IFRIC 21 Levies
The interpretation provides guidance on accounting for levies payable to government. It specifies that the obligating event giving
rise to a liability to pay a levy is the activity that triggers the payment of the levy, as identified by the legislation. A constructive obligation
for levies that will be triggered by operating in future is not raised by virtue of the entity being economically compelled to operate
in future or for being a going concern. Furthermore, if the obligating event occurs over a period of time, then the liability is recognised
progressively. An asset is recognised if an entity has prepaid a levy before the obligating event. This accounting also applies to interim
reporting.

The effective date of the interpretation is for years beginning on or after 1 January 2014.

The group expects to adopt the interpretation for the first time in the 2015 financial statements.

It is unlikely that the interpretation will have a material impact on the company's financial statements.

IFRS 10, IFRS 12 and IAS 27 - Investment Entities
The amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities.
These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with
IFRS 9 Financial Instruments in its consolidated and separate financial statements. The amendments also introduce new disclosure
requirements for investment entities in IFRS 12 and IAS 27.

The effective date of the amendments is for years beginning on or after 1 January 2014.

The group expects to adopt the amendments for the first time in the 2015 financial statements.

It is unlikely that the amendment will have a material impact on the company's financial statements.

46AFRICAN DAWN ANNUAL REPORT 2014

Notes to the Financial Statements continued

2014 2013
Accumulated
3. Property, plant and equipment Accumulated Carrying depreciation Carrying
value value
Group Cost depreciation Cost R '000 R '000
Furniture and fixtures R '000 R '000
Motor vehicles R '000 R '000
Office equipment 76
IT equipment 605 (529) 4 866 (770) 96
Total 29 (25) - 782 (310) 472
62 (62) 284 (247)
12 1,095 (801) 37
236 (224) 92 3,027 (2,128) 294
932 (840) 899

Company 605 (529) 76 605 (525) 80
Furniture and fixtures 62 (62)
Office equipment - 62 (57) 5
IT equipment 228 (219)
Total 895 (810) 9 228 (179) 49

85 895 (761) 134

Reconciliation of property, Opening Disposals Classified Depreciation Total
plant and equipment - balance R'000 as held R'000 R'000
Group - 2014 - for sale (4)
R'000 - R'000 (6) 76
Furniture and fixtures 96 - (16) (5) 4
Motor vehicles (3) (462) (46) -
Office equipment 472 (3) (32) (61)
IT equipment 37 (233) 12
Total (743) 92
294
899

Reconciliation of property, Opening Impairment
plant and equipment - balance
Group - 2013 Additions Disposals Depreciation loss Total
Furniture and fixtures R'000 R'000 R'000
Motor vehicles 205 - (30) R'000 R'000
Office equipment 92 454 - 96
IT equipment 78 4 - (100) 21 472
395 238 -
770 696 (74) - 37
(30) 294
(45) - 899

(208) (131)

(427) (110)

47AFRICAN DAWN ANNUAL REPORT 2014


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