Accounting Policies continued 1.20 Significant judgements and sources of estimation uncertainty (continued) Uncertainty Action Status Timing of the amount payable to SARS. (refer to note 13) The directors have engaged with tax advisors to assist them in making a submission to SARS. The submission to SARS has sought to demonstrate that: (a) it is not in SARS’ interest to demand payment in full in the short term as this will likely results in SARS not being able to recover the full, or a substantial portion of the debt, and (b) the prospect of payment in full of the tax liability will improve substantially over the next 12 months. In order to demonstrate good faith Afdawn has offered to make certain minimum payments pending resolution of the above application The current relationship with SARS is constructive and conducive to an amicable outcome i.e. an outcome that achieves full payment of the tax liability over a reasonable period of time. Ability of Afdawn and all of its subsidiaries to meet ongoing commitments. The risk of this uncertainty materialising in a manner that could affect the relevance of the going concern assumption could arise in a period of about 9 months’ time. (Refer note 48.) A number of actions are being taken to mitigate the risk of this uncertainty materialising. These include: (a) Discussions are under way with various parties that could result in the sale or other realization of various assets (or portions thereof). In one instance the possible transaction would also generate additional income streams. (b) The Company has a long-enduring and very constructive relationship with its funders. Experience has proved that these relationships can be relied on to support the continued existence of the Group. a) Some of these discussions are at an advanced stage and are considered to have a reasonably high probability of resulting in transactions. b) There is ongoing engagement with funders AFRICAN DAWN 58 ANNUAL REPORT 2015 Elite has been repaying the Sandown loan on a monthly basis, but has not fully complied with the agreed repayment schedule. Sandown could demand repayment of the loan. Elite has made arrangement with Sandown on a monthly basis when needed. Elite has ongoing negotiations with Sandown. These negotiations centre on accommodating Elite’s ability to repay the loan within a longer period. Sandown’s continued support is based on the successful conclusion of the recapitalisation of Elite referred to below. Since October 2014, Elite has repaid R4,1m of the original R15m Sandown loan. Elite needs to be recapitalized. Afdawn will convert a portion of its shareholders loan into equity in Elite. A third party will acquire 51% of the economic interest in Elite by providing R15m of permanent capital, a further R15m loan funding facility for 5 years and access to a client base. This will give Elite the ability to generate the required cash flow to fund operations, growth and other financial obligations. The shareholder’s loan will be converted into equity in Elite in November 2015.A heads of agreement has already been signed with a third party.
AFRICAN DAWN 2015 Annual Report
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