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AFRICAN DAWN ANNUAL REPORT 2020

From the Chair

Dear fellow Shareholder,

Since the publication of our previous results, the Company continued to operate in an already chronic
South African economic environment. Given this backdrop, the Group remained hamstrung by the difficulty
to access funding for growth, which resulted in further revenue contraction, especially for the Group’s core
asset, Elite. This resulted in the Group posting a further loss in earnings.
Fortunately the experience of managing the Group for survival in adverse conditions in the past stood the
Group in good stead, little did we know what was coming in the form of COVID-19.The primary focus
continued to be on world-class risk management systems, cost efficiencies, reduced cost to serve and
originate, optimal capital management and ethical business practises.
… And then COVID-19 Lock-Down struck, but disaster turned into opportunity…

A mere 26 days after financial year end, COVID-19 lock-down struck South Africa with the global disaster
exacerbating, beyond human comprehension and memory, an already negative economy to a state of
disaster. The Group’s ability to be agile and adapt in crisis time turned out to be the major strength and
in fact allowed, what we believe, an enhanced positioning for the future. Management were proactive in
streamlining the business further, managing risk and establishing smart ways of doing business and delivery
to clients. Added to this the Group managed to secure R10million in permanent funding post year end, for
growth purposes in Elite and all major creditors were settled. Refer to note 31.

Some key features of the proactive steps taken during lock-down and positioning for future:
• The board and management remained in close contact, meeting and discussing operational issues and
plans on a daily basis
• During the lock-down with branch closures, Elite moved to a more centralised, digital, automated and
remote controlled way of serving (e.g. all branch systems were consolidated into one central location)
• During close scrutiny of the client base and debtors book it was clear that ~70% of the loan book
and clients were in the essential services category, which clearly supported risk management and the
maintenance of provisions for bad debts within Elite’s world-class policy range. This also allowed the
business to keep on growing, albeit at much slower pace
• Continued streamlining of the business yielded cost savings in areas such as procurement, suppliers, and
rental, to mention a few
• Where applicable the group made use of government breaks, including UIF and PAYE payment gaps
• Some branches were merged, which yielded cost benefits and should enhance service levels
• Elite embarked on developing a digital channel during this time and its roll out is imminent. This we
believe will be a growth engine, at lower originating costs, for the business and could tap into markets
and sectors currently not accessible to the company.

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