AFRICAN DAWN ANNUAL REPORT 2018 Application of principles in King IV continued 17 The governing body needs to ensure that the organisations’ core purpose, values, strategy and conduct are aligned to being a good corporate citizen. The organisation has had significant challenges from a business perspective and the strategy has had to change to meet difficult circumstances over the last few years. The governing body needs to oversee and monitor the consequences of activities and outcomes in relation to: • Workplace • Economy • Society • Environment The economic constraints mean that employees and executives have not received remuneration that is fair. This will be addressed once the business is on a more stable footing. The other key constraint has been the long time it took to obtain a settlement from SARS as it was difficult to take the business forward with the uncertainty this created. The customers are treated fairly and in terms of statute. The economy has also been a slight constraint as it means customers struggle to repay loans. Environmental outcomes are not significant to the company. The SARS settlement has now opened opportunities to allow funding and a significant improvement in future results. This will mean that all aspects will be able to be reviewed in the future, in particular to the management and employee remuneration. Strategy, Performance and Reporting Principle 4: The governing body should appreciate that the organisations’ core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value reation process. The governing body is responsible for performance and strategy taking into account risks and circumstances. The company has been in a difficult and cash strapped state since the previous governing body was removed. The assets were initially perfected and have now been sold. The SARS claim meant that investors were not interested in funding a company that was not performing and deals could not be closed as funding could not be provided. The Knife Capital deal that was to provide funding to the parties was a problem for all involved as they did not receive the funding that was anticipated. Value has been destroyed over time as the compromise took ten years to be resolved. Despite cost cutting at Elite and at corporate office, without funding Elite has been breaking even and could not improve profits in line with its potential. The company will now need to pay the compromise off by February 2019 and concurrently develop the strategy that will pay all debts owing and return value to the shareholders. The governing body has had a challenge to sell the assets and keep the company liquid. The opportunity now exists to create value. The management below the governing body are now the Elite management and they have gone to great lengths in difficult times to ensure the company remains sustainable. The governing body should ensure that reports issued by the organisation enable stakeholders to make informed assessments of the of the organisation’s performance, and its short, medium and long term prospects. The key reporting in the last few years was the Annual Financial Statements, published SENS documents and circulars. With the clean up and liquidation of assets and deals that have been structured and some which have failed, the governing body now believes that the company is in a position to move the strategy forward. An integrated report will be produced as soon as funds are available to do so. The oversight and performance including general viability and reliance and effects of capitals, the solvency and going concern have been challenging. The governing body and in particular the executives have made personal sacrifices to ensure the long term sustainability, solvency, liquidity and going concern status has been maintained in difficult conditions. The audit report has had material uncertainties relating to going concern for the past two years. The way forward is a great deal clearer now that the SARS settlement has been made.
AFRICAN DAWN 2018 Annual Report
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