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AFRICAN DAWN ANNUAL REPORT 2020

Notes to the Financial Statements continued
Annual Financial Statements For the year ended 29 February 2020

29. Change in estimate

Intangible assets

In the current year the useful life of YueDiligence software was revised as there was an indication that the software was not aging as originally
anticipated. The estimated useful life is 4 years (2019: 3 years). The effect of this revision has decreased the amortisation for the current periods
by R50,120 (2019:nil).

30. Commitments
Operating leases – as lessee (expense)

Minimum lease payments due 2020 2019
- within one year - 929
- in second to fifth year inclusive - 797
- 1,726

The group adopted IFRS16 in 2020, in terms of the new standard all leases are included statements of financial position – leases.

In the prior year under IAS17, operating lease payments represent rentals payable by the Group for certain of its office properties. Leases are
negotiated for an average term of three years with an option to extend. No contingent rent is payable.

31. Events after reporting period
- Impact of the spread of COVID-19

The group notes the announcement made by the World Health Organisation (“WHO”) declaring the COVID-19 a Global Pandemic and the
President of South Africa Cyril Ramaphosa on Monday, 23 March 2020 during which it was announced that the South African Government will be
implementing a 21-day nationwide lockdown with effect from midnight on Thursday, 26 March 2020 until midnight on Thursday, 16 April 2020
and further extended indefinitely to curb the spread of COVID-19. The lockdown was extended beyond the initial 21 days and a 5 stage approach
was implemented .It is noted that as there were no reported infections in South Africa at 29 February 2020 and the likelihood of this evolving into
an epidemic in South Africa was considered to be small considering the geographic distance of South Africa to the infections the directors viewed
the impacts of Covid-19 as a non-adjusting event.

It is anticipated that the COVID-19 pandemic will affect the group’s profitability for the year ending 28 February 2021 largely in the expected
credit loss allowances adjustment to the trade and other receivables, due to the economic impact of the nationwide lockdown. In order to
mitigate the effect management has implemented a number of policies the most significant being a reduction in the maximum loan granted and
shortening the repayment period.

At the start of the lockdown the group closed all offices for business and Elite moved all the branches programs to one computer and the division
and area manager worked from home. When the lockdown moved to Level 4 on 1 May 2020 only essential offices were opened to serve the
clients. President Cyril Ramaphosa then announced a countrywide move from level four to level three lockdown on 1 June 2020. Elite opened all
office and worked in shifts in order to allow for social distancing to limit the disease spread. On the 17 August 2020 the country moved to level 2
and Elite is keeping operations for August as per Level 3.

The directors have evaluated the effect of the COVID-19 pandemic, for which the following impact has been identified:
Going concern

For details of the evaluation performed on the impact of the COVID-19 pandemic on the group’s ability to continue operations for the foreseeable
future, refer to note 1.18.
Collections

Pre Covid-19 Instalments in arrears averaged R318,000 per month. During April this increased to R415,000. This amount almost doubled in May,
however since July Elite is almost back to normal at R324,000. The reason for this appears to be that Clients accounts had insufficient funds for
the debit order instalments to go off against. The more the lockdown was relaxed more clients got back to work and are in the position to come
to the branch and make payments on arrears.

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