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AFRICAN DAWN ANNUAL REPORT 14

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


AFRICAN DAWN ANNUAL REPORT 14
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