The COVID-19 outbreak has significantly affected lives, entities and economic activity around the world. In 2020, many countries around the world have, among other radical actions, implemented national lockdowns as part of attempts to contain the spread of the virus.

Responding to the COVID-19 outbreak world-wide, the South African President declared a national state of disaster on 15 March 2020 with a partial travel ban, closing of schools and prohibiting of large gatherings of people. Following this action, on 23 March 2020, the South African President declared a national lockdown, with only certain core essential services (and their related employees) allowed to continue working as normal, in the interest of maintaining the availability of such essential services (one of which included healthcare services) to the citizens of South Africa. The lockdown was then further extended by the President on 9 April 2020, with a tentative, unconfirmed end date planned for the end of September 2020.

The COVID-19 pandemic and related nation-wide lockdown have not interfered with the Group and its subsidiary entities' ability to continue in operation and the usual levels of operations of the business have continued as normal even during all the levels of the lockdown periods.

The impact of the COVID-19 pandemic and the related lockdown is immaterial, as the Group has since been able to continue in operation during the pandemic in an unaffected manner. The following factors were considered in the going concern assessment:

• Revenue – The Group's core business of administration of medical aid and provision of medication is considered to be a healthcare-related essential service and has remained unaffected by the COVID-19 lockdown. The Group revenue has therefore remained unaffected.
• Inventory – The Group and its subsidiary entities have experienced no disruption in the supply chain during the year and this is expected to continue in the 2021 financial year.
• Financial instrument risk disclosures – Due to the rapidly changing economic environment, the Group and its subsidiary entities have been subject to an increasing market risk and fair value risk. To this effect, the Group's sensitivity analysis has been performed using a larger range for the risk affected variables (Notes 7 and 8). This range is based on management's expectation of COVID-19.
• Borrowings repayment and classification – The outstanding balance of the Group's borrowings as at 30 June 2020 is R386 million. The Group is not in breach of the covenants. The Group is anticipating to make R120 million payments in the next 12 months as and when they become due. No deferral of capital repayments is expected.

The consolidated and separate financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The AfroCentric Group and its subsidiary companies will still continue to operate as going concerns as there are sufficient financial resources to continue operating into the future.

The COVID-19 pandemic and related nation-wide lockdown have not interfered with the Group's ability to continue its operations as the entities have continued as normal even during the lockdown period, seeing as the following were deemed to be a healthcare-related essential service:

• Administration of medical aids;
• Provision of chronic medication;
• Supply and distribution of medicine;
• Primary and occupational healthcare services;
• Information technology solutions; and
• Health insurance.

The current contracts in place with the various medical aid schemes, private and public practitioners are not under threat as services were performed throughout all the respective levels of lockdown.

Furthermore, there has not been any regulatory changes announced by the President of South Africa that will threaten the Company's ability to continue as a going concern.