AFRICAN DAWN ANNUAL REPORT 2018 Notes to the Financial Statements continued Annual Financial Statements For the year ended 28 February 2018 Loans to group companies impaired As of 28 February 2018, loans to Group companies of R69,808million (2017: R 76,293million) were impaired and provided for. The amount of the impairment and deemed interest was R58,186million as of 28 February 2018 (2017: R 51,076million). The method and reasoning for impairment is as follows: · Loan accounts balances at year end are compared to owing company net asset value to determine if there is an indicator of impairment. · The loan accounts are written down to net asset value. · If there is still loan accounts left after the write down then because loans are interest free the loans are discounted at a rate of 11.19%. Acquisition of SME Snapshot Proprietary Limited In July 2017 the Group acquired 100% of the equity and claims in SME Snapshot through the issue of shares in subsidiary YueDiligence. 18 new shares with a par value of R1 each were issued to Phezulu Group Close Corporation which is 15% of the equity control of YueDiligence to acquire control of the company. The acquisition is summarized below: 63 10. Trade and other receivables Group Company 2018 2017 2018 2017 R’000 R’000 R’000 R’000 Trade receivables 30,291 50,672 37 - Impaired allowance (9,288) (20,602) - - Deemed interest on trade debtor (152) (585) - - Deposits 286 267 - 31 VAT 10 - 10 - Phezula (A) 418 - - - Thinkroom (B) 946 - 946 - Other receivables 340 1,441 1 83 22,851 31,193 994 114 (A) Phezula the previous owners of the new subsidiary, SME Snapshot were given a cash loan to assist with further development of the software in SME Snapshot. The loan bears interest at prime and is repayable at R50,000 per month starting in May 2018 with the last payment in December 2018. (B) Thinkroom the purchaser of associate Grindstone have an agreement to settle the purchase consideration in a number of short term installments. R800,000 is outstanding in terms of the purchase consideration and R146,000 is outstanding in terms of a loan Grindstone pay to the company on a monthly basis. Refer to Note 36 for a detailed analysis of the trade receivables. 11. Business Combinations Acquisition of SME Snapshot Proprietary Limited Fair value of net assets and liabilities acquired: Intangible assets software developed at fair value 104 - Liabilities to owner at fair value (352) - Net liability acquired (248) - Outside shareholders share of liability 15% of SME Snapshot NAV 37 - Goodwill on acquisition 211 - Cash effect of transaction - -
AFRICAN DAWN 2018 Annual Report
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