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AFRICAN DAWN ANNUAL REPORT 14

Notes to the Financial Statements continued Group Company 2012 2011 2012 2011 R '000 R '000 R '000 R '000 34. Risk management continued Market price risk Market price risk is the risk that the value of a financial asset will fluctuate as a result of changes in the market prices or changes in the market interest rates. The Group is currently exposed to a market price risk that will determine the ways of settlement of the convertible bonds in future periods. Other market risks are not deemed to be significant. Capital adequacy risk The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The capital structure of the group consists of debt, which includes the borrowings disclosed in note 16 and 17 cash and cash equivalents disclosed in note 12, and equity as disclosed in the statement of financial position. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the debt: equity ratio. The CellCaptive (Insurance) is subject to capital requirements in line with the Insurance Act. The Statutory Capital Adequacy Requirement is the additional amount required, over and above the actuarial liabilities, to enable the company to meet material deviations in the main parameters affecting the life assuror’s business. The company has complied with these requirements during the year. 35. Events after the reporting period 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 issued: 272 086 442. Knife Capital Proprietary Limited acquisition The Company acquired 100% of the share capital of Knife Capital Proprietary Limited ("Knife Capital") on the 8th April 2014 by the issue of 100 000 000 African Dawn Capital shares on 8 April 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. Knife Capital focuses on the investment and management of investments in high growth and high impact technology enabled businesses and hereto still manages HBD Business Holdings Proprietary Limited’s South African portfolio of investments. It also provides consulting, training and business acceleration services to high-growth early-stage ventures and is committed to filling critical gaps in the local entrepreneurial ecosystem. The final audited financial statements of Knife Capital have not been completed as at the date of completion of the integrated report so computations relating to valuation of the company cannot be indicated at this stage. Pro forma accounts and further details on the acquisition are included in the circular issued to shareholders on 13 December 2013 and the related SENS announcements. AFRICAN DAWN 7 3 ANNUAL REPORT 2014


AFRICAN DAWN ANNUAL REPORT 14
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