AFRICAN DAWN ANNUAL REPORT 2017 Notes to the Financial Statements Annual Financial Statements For the year ended 28 February 2017 continued 84 Interest rate risk The sensitivity analyses below has been determined based on the exposure to interest rates for non-derivative instruments at the statement of financial position date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the statement of financial position date was outstanding for the whole year. A 100 basis points increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis points higher or lower and all other variables were held constant, the group’s loss for the period would change by R216 035 (2016: R190 368) (company: Rnil (2016: Rnil). The group and company’s sensitivity to interest rates has decreased during the current period mainly due to the restructuring in variable rate debt instruments (refer to note 15). A 100 basis points increase would increase revenue on unsecured lending by an estimated R373 945 (2016: R393,900). A 100 basis points increase would increase finance costs on borrowings linked to prime by an estimated R157 910 (2016: R203 532)(refer to note 15). 36. Events after reporting period Non-adjusting events Elite Transaction In June 2016, Afdawn and Dzothe Finance Solutions (“Dzothe Fin”)entered into an revised agreement whereby Afdawn will sell 100% of equity and certain shareholder claim of Elite , PTF1 and PTF2 to Dzothe Fin for a consideration of R20million. African Dawn shareholders approved the Elite transaction in October 2016 . Dzothe paid the R2million deposit but failed to make payment of R10million on Closing Date of transaction and Dzothe was in breach . Afdawn notified Dzothe to remedy breach and after further negotiation Afdawn decided to cancel the transaction on 12 May 2017 in terms of the agreement. Afdawn reserves it rights to claim and recover damages. Disposal of Property in possession Candlestick A sales agreement was entered on 8 April 2016, in terms of which the property will be sold for R32 500 000. The group expects to realize R8 373 000 from the sale. The property was transferred on the 10 May 2017 and Candlestick has received their portion of the proceeds and the Nedbank bond , PTF3 and the Blue Dot Liquidator were settled in full.. 37. Segment report The segment information has been prepared in accordance with IFRS 8 - Operating Segments which defines the requirements for the disclosure of financial information of an entity’s operating segments. IFRS 8 requires segmentation based on the group’s internal organisation and reporting of revenue and operating income based upon internal accounting methods. The group discloses its operating segments according to the components regularly reviewed by the chief operating decision-makers, being the executive directors. These amounts have been reconciled to the consolidated financial statements. The measures reported by the group are in accordance with the accounting policies adopted for preparing and presenting the consolidated financial statements. Segment revenue excludes value added taxation and includes inter- segment revenue which is R1,515 million (2016: 2,642). Net revenue represents segment revenue from which intersegment revenue has been eliminated. Sales between segments are made on a commercial basis. Segment operating profit before capital items represents segment revenue less segment expenses. Segment expenses consist of operating expenses. Depreciation, amortisation and impairments have been allocated to the segments to which they relate. The segment assets comprise all assets of the different segments that are employed by the segment and that are either directly attributable to the segment, or can be allocated to the segment on a reasonable basis. The group’s reportable segments are based on the following lines of business: a. Investment advisory and investment management This segment consists of the Knife Capital Group which provides investment advisory and investment management services to entrepreneurial and innovative companies. b. Micro finance This segment consists of Elite and Elite Two. These companies are involved in micro finance in the unsecured lending industry and have a wide base of customers (mostly individuals).
AFRICAN DAWN 2017
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