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Johannesburg - Earnings growth at lending specialist African Dawn Capital has failed to achieve the triple figure targets it predicted in 2008. The company is banking on affordable housing finance as source of growth.
However, the AltX-listed lender managed to report headline earnings growth of 54% to 87.9c per share when it reported on Thursday for the year to end-February 2009, while revenue rose from R238m to R443m.
"The main reason for the growth has been that the banks have closed their vaults, but while volumes are up we have to sort through the riff-raff," said CEO Marius van Tonder.
He added that the group did not have unlimited funding and would need to be selective in terms of who it lends to.
Bad debts across the group's lending portfolios rose from 1% in the last financial year to about 4.5%.
"We are feeling the pinch a bit as it takes longer to get the money back or when we have to pursue the surety," Van Tonder said.
In the previous financial year, the company saw headline earnings climb by 275% as it rapidly acquired other smaller players in the micro-lending and secured lending space.
CEO Marius van Tonder previously told Fin24.com that the company was eyeing a listing on the JSE main board, a move the group was still "considering".
Banking on affordable housing
One of the line items that will have struck investors is the sharp decline in operating cash flow, which swang from a cash positive position of R119m in the previous year to a negative R79m.
Van Tonder explained that the company had invested heavily in affordable housing projects - an area it believes will be a major growth space in coming years.
"We'll be back in cash in this financial year," he said, adding that many of the affordable housing projects had already been pre-sold.
The last nine months have been turbulent for African Dawn and its management.
One of its subsidiaries was forced to bring a liquidation order against against a subsidiary of embattled listed food producer Country Foods.
In late 2008, Van Tonder and his fellow directors were caught on the wrong side of a falling market after entering into large single-stock futures positions, which they were forced to exit at a deep loss.
More recently, a subsidiary of African Dawn confirmed exposure to liquidated money market fund operator Corporate Money Managers.
The market responded positively to the results on Thursday, with the share price rising 4.6% (7c) to 160c.
- Fin24.com