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AFRICAN DAWN Annual Report 2016

Notes to the Financial Statements Annual Financial Statements For the year ended 29 February 2016 15. Borrowings (continued) continued (A) The Sandown Convertible bond was renegotiated and in terms of the new agreement, there is no conversion element and the balance was split into 2 loans, “Sandown Capital Proprietary Limited” and “Sandown Capital interest portion of loan”. Sandown Capital Proprietary Limited refers to the original capital advanced and Sandown Capital interest portion of loan being the capitalised interest on the original loan. The original terms of the agreement were a conversion period of 36 months from date of issue, conversion price of R 0.14, interest levied at JIBAR on 3 month discount +600 basis points. The bond arose as part of the recapitalisation and rights issue in 2011. Refer to note 17 for further details. (B) The loan bore no interest in 2015 and was therefore present valued such that R75,764 deemed interest was recognised over the life of the loan. R43,447 of this has been recognised in 2015, leaving a balance of R32,317 that was recognised in 2016. (C) The loan bore no interest in 2015 and was therefore present valued such that R493,992 deemed interest will be recog-nised over the life of the loan. R66,155 of this has been recognised in 2015, leaving a balance of R427,837 recognised in 2016. (D) The loan bore no interest and has therefore been present valued such that R91,582 deemed interest was recognised over the life of the loan. Nil of this has been recognised in 2015, leaving a balance of R91,582 to be recognised in 2016. In terms of the settlement agreement with the NHFC that was signed on 30 May 2011, Nexus (a wholly owned subsidiary of Afdawn) facility of R5 million became payable in October 2013. Nexus has ceded it debtors book as security for payment of the amount. NHFC demanded payment from Afdawn. Nexus was liquidated in October 2014 and NHFC instituted Arbitration proceedings against Afdawn for the payment of R5 million plus interest and costs in terms of the settlement agreement. In terms of the out-of-court settlement, Afdawn as guarantor is liable for payment of amount of R3,75 million payable as follows: R2 million was paid on 6 February 2015 and the balance was interest-free and was paid on the 30 September 2015. Total present value adjustment recognised as a gain in 2015 was R661,338. Total deemed interest expense recognised in 2016 is R551 736 (2015: R109 602) (Refer to note 26). 16. Finance lease liabilities Group Company 2016 R’000 2015 R’000 2016 R’000 2015 R’000 Minimum lease payments due - within one year 19 122 - - - in second to fifth year inclusive - 74 - - 19 196 - - less: future finance charges - (14) - - Present value of minimum lease payments 19 182 - - Non-current liabilities - 60 - - Current liabilities 19 122 - - 19 182 - - It is group policy to lease certain motor vehicles under finance leases. The average lease term is 1-5 years and the average effective borrowing rate is 11% (2015: 10%) Interest rates are linked to prime at the contract date. All leases have fixed repayments and no arrangements have been entered into for contingent rent. The group’s obligations under finance leases are secured by the lessor’s charge over the leased assets. Refer to note 3. AFRICAN DAWN ANNUAL REPORT 2016 79


AFRICAN DAWN Annual Report 2016
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