Page 85 - annualreport2020

AFRICAN DAWN ANNUAL REPORT 2020

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

Bad Debts

Bad debt handed over to collections pre Covid-19 average at about R107,000 per month and during lockdown this increased to R109,000 per
month which is not large considering the economic circumstances. This is believed to be due to the loan periods being limited to 3 months and
clients frequent contacted by branch personnel.
Staff

Elite applied for the TERS assistance from March to end June 2020, which assisted with the cash flow.

Rent paid

Funding restrictions had the biggest impact and arrangements were made with Landlords for rental to be delayed with a catch up later in the
financial year. Arrangements was also made with other suppliers of the company.

Revenue
The impact on revenue is directly related to the ability to lend out money and not necessarily related to COVID.

This can been seen in April when Company was in full lockdown, both total loans advanced and revenue fell sharply but from June as lending
increased revenue and loan advances were starting to return to normal with both loans and revenues growing close to pre Covid-19 levels.

Below is an estimation of the effect on Elite revenue during the lockdown:

March 2020 April 2020 May 2020 June 2020 July 2020
Revenue R625 110 R391 111 R489 796 R508 421 R579 570

Plans implemented

• Additional funding (see below) was raised and is being lent out in tranches as it becomes available.
• Raise more funding.
• Build a mobile APP for the clients to use so that they can have less exposure to the virus.
• Start a branch call centre to service the APP and Popup branches for marketing purposes.
• Get into the Truckstop Environment with the Popup branches, Elite Card and APP.
• Market the Call Centre to the corporate marketplace.
- Additional funding

The group has secured long term permanent funding as announced on SENS 9 June 2020. The company has entered into binding term sheet with
Caleo, in terms of which Caleo will provide long-term funding to Elite, Afdawn’s subsidiary that provides personal loans to the mass market. The
capital provided to Afdawn will be used to support operational expenses and, more significantly, provide funding for expansion of the lending book
of Elite.

In terms of the Term Sheet, Caleo will provide a total of R10 million of long-term loan funding to Elite in three separate tranches. The funding is
considered to be permanent capital in that it has no set repayment date or redemption term. The funding will be provided as follows:

• In terms of tranche 1, Caleo will provide a loan of R3.6 million to Elite at an interest rate of 1.5% per month, within 1 (one) month of the Term
Sheet becoming binding and unconditional, and Afdawn shall issue 9% of its issued share capital to Caleo, in settlement of capital raising fees
due to Caleo in terms of tranche 1 (“Tranche 1 Shares”). The Tranche 1 Shares shall be issued at the 30-day VWAP (Volume Weighted Average
Price) of the Afdawn less 10%;
• In terms of tranche 2, Caleo will provide a loan of R1.4 million to Elite at an interest rate of 1.5% per month, immediately after the
disbursement of Tranche 1, and Afdawn shall issue an additional 3.5% of its issued share capital to Caleo, in settlement of capital raising
fees due to Caleo in terms of tranche 2 (“Tranche 2 Shares”). The Tranche 2 Shares shall be issued at the 30- day VWAP (Volume Weighted
Average Price) of the Afdawn less 10%; and
• In terms of tranche 3, Caleo will provide a loan of R5 million to Elite at an interest rate of 1.5% per month, within a 3(three) month period of
the disbursement of Tranche 2, and Afdawn shall issue an additional 7.5% of its issued share capital to Caleo, in settlement of capital raising
fees due to Caleo in terms of tranche 3 (“Tranche 3 Shares”). The Tranche 3 Shares shall be issued at the 30-day VWAP (Volume Weighted
Average Price) of the Afdawn less 10%.

83