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AFRICAN DAWN Annual Report 2016

Notes to the Financial Statements Annual Financial Statements For the year ended 29 February 2016 33. Liquidation of Nexus continued Group Company 2016 R’000 2015 R’000 2016 R’000 2015 R’000 Carrying amount of net assets disposed of Trade and other receivables gross - (43,309) - - Trade and other receivables impairment - 38,181 - - Tax liabilities (refer to note 31) - 6,497 - - Borrowings - 5,000 - - Cash - (396) - - Amount due from Elite - (2,742) - - Total net assets disposed - 3,231 - - Net assets on disposal - 3,231 - - Profit on disposal (refer to note 23) - (3,231) - - - - - - No consideration was received. Cash outflow on liquidation Cash disposed of - (396) - - 34. Contingencies Knife Capital Group incentive scheme The agreement relating to the acquisition of Knife Capital Group outlined various future incentives that the sellers would be entitled to. It stated that these amounts would be agreed upon by the effective date (being March 2014). This has not been done and therefore the amount of the liability could not be measured with sufficient reliability. At year end it was not possible to estimate the financial effect of this liability, nor when it would be settled, for this reason a liability was not recognised. There was no possibility of any reimbursement. As announced on SENS on 1 July 2015, the vendors of Knife Capital have released Afdawn Group from these incentives. Sandown legal fees At the time that Elite acquired 100% of Elite Two from Sandown, Sandown took over debtors with a value of R14 337 165. The claims against those debtors will be pursued in Sandown’s name. However, the costs of the legal proceedings will be shared equally by Elite and Sandown. If at least R10 million of this amount is collected, Elite will be paid a fee of 50% of the excess. However, Elite is not liable for any amount that is not collected. With respect to the legal claims, no legal work had been done by the reporting date. Between 1 March 2015 and 31 August 2015, costs of R94 181 had been incurred. A contingent liability exists for possible future legal fees but the amount cannot be reliably determined. Allegro Holdings Proprietary Limited (“Allegro”) Afdawn Group previously concluded a Memorandum of Understanding (28 February 2013) which will facilitate an amicable conclusion to the matter. Progress has been slow in this regard. Thus far the company has not become aware of any information during its deliberations that will alter its conclusion reached previously. To the date of signing this report no claims have been received by Afdawn Group, nor has it been possible to establish any basis for a potential claim against Afdawn Group and therefore no provisions have been made for any such contingency. AFRICAN DAWN ANNUAL REPORT 2016 91


AFRICAN DAWN Annual Report 2016
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