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AFRICAN DAWN Annual Report 2016

From the Chair Dear Shareholders In the few months since our last report we’ve made good progress on a number of issues. In summary, the group has been stabilized following the challenges arising from the error disclosed in the previous financial statements and which was dealt with more fully in a memorandum published on the company’s website on 8 December 2015. Further progress has been made in disposing of non-core assets. We are moving towards implementing the vision to become an active investment holding company. Elite Key goals in turning around the business were to maintain revenue, reduce operating expenses, lower impairments and increase operating cash flows in order to repay funders. Another important goal was to make Elite Group investment ready in order to attract a funding partner. All these goals were achieved. • Turnover was maintained at R24 million while operating costs were reduced from R26 million to R18 million and bad debt impairments reduced from R15 million to R3,2 million. This resulted in profit before tax of R1,6 million versus a loss in the previous period of R18 million. • Cash flow from operations increased to R6.3 million versus R1,2 million in the previous period. This made it possible for Elite to adhere to agreed repayment terms of funding facilities. • In line with our more conservative provisioning policy the debtor book provision increased from 35% to 37,5%. The debtors book was again evaluated by a third party to ensure the new provisioning policy resulted in an appropriate valuation of the debtors’ book. • An agreement was concluded for the sale of a 51% shareholding in Elite Group to Dzothe Investments as the first step to reducing Afdawn’s shareholding. Subsequent to the signature date, a SENS was released on 28 June 2016 whereby this transaction was revised to a 100% sale of Elite to Dzothe Investments. Knife Capital Knife Capital’s purpose is to enable entrepreneurial businesses through securing financial investments, providing ancillary advisory services and conducting a structured entrepreneurial support programme through its subsidiary Grindstone. Whilst working towards securing investable capital, the business has focused on retaining its relevance to entrepreneurial business through the provision of much-needed advisory and business acceleration services. Both these areas continue to provide the intended enablement to those businesses. The real stakeholder value will however be unleashed when coupled with investable capital. Securing a pool of investable capital has remained a challenge. That said, the changes to tax legislation providing favourable tax treatment for investors through a section 12J registered vehicle has opened a new opportunity to secure investable capital. We have pursued this alternative and have to date secured very positive traction from interested investors. The aim in the short term is to secure these investments through the SARS approved stand-alone vehicle and then to start placing investments. 4 AFRICAN DAWN ANNUAL REPORT 2016


AFRICAN DAWN Annual Report 2016
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