Notes to the Group Annual Financial Statements | Note 3.4

3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
3.4 Financial liabilities
 

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Refer to accounting policies on borrowings and trade and other payables for financial liabilities (which exclude employee-related liabilities and VAT), and share capital for equity instruments issued by the Group.
3.4.1 Trade and other payables
 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.

  2024
R’000 		  2023
R’000
Trade payables 4 547 103   4 649 631
Accruals 205 217   163 242
Employee benefits 153 494   125 516
Sundry creditors 379 472   674 342
VAT 49 772   23 539
  5 335 058   5 636 270

The fair value of the trade and other payables approximates their carrying amounts due to being payable in the short term.
3.4.2 Borrowings
 
    2024
R’000 		  2023
R’000
Interest-bearing borrowings   4 075 531   4 070 401
Non-interest-bearing borrowings   719   2 719
    4 076 250   4 073 120
Amounts included in non-current portion of borrowings   2 910 060   1 842 765
Amounts included in current portion of borrowings   1 166 190   2 230 355
Categories of borrowings:        
Airtime sale and repurchase obligations   474 831   988 245
Class A Preference Shares   180 254   172 107
Facilities   3 411 018   2 902 722
Other third-party borrowings   10 147   10 046
Total borrowings   4 076 250   4 073 120

 

       Airtime sale and repurchase obligations   Class A  
Preference  
Share*
       From  
lenders  
R’000  		 From other  
third parties  
R’000  		 Total  
R’000  		 R’000  
Opening balance as at 1 June 2023      857 319   130 926   988 245   172 107  
Long-term borrowings raised      260 870   —   260 870   —  
Interest expense      249 616   15 944   265 560   28 829  
Gain on modification of financial liability      —   —   —   (20 682)
Repayments      (892 974) (146 870) (1 039 844) —  
Closing balance as at 31 May 2024      474 831   —   474 831   180 254  
Amounts included in current portion of borrowings      474 831   —   474 831   10 567  
Amounts included in non-current portion of borrowings      —   —   —   169 686  
Effective interest rate (%) (2023 airtime sale and repurchase)    40.40   25.75       11  
Effective interest rate (%) (2024 airtime sale and repurchase)    14.60   —       —  
* The preference dividends are indexed to 15% of the ‘upside’ realised by TPC on the debt funding to Cell C (refer to “Loans to Cell C” in note 2.1.1). The liability has been modified for the change in expectations of the future dividends payable based on the updated expectation of the future cash flows related to the debt funding.

TPC borrowings – from lenders and Class A Preference Share

The 2023 airtime sale and repurchase from lenders represents a financing transaction, with the airtime as security, together with the issue of the Class A and Class B Preference Shares, which provide the lenders with additional compensation for their risk. As such the amount of borrowings was attributed to these three elements at their respective fair values. Refer to note 3.5 for further details on the accounting treatment of the Class B Preference Shares.

The 2024 airtime sale and repurchase from lenders represents a financing transaction, with the airtime as security.

The 2023 and 2024 airtime sale and repurchase loans, and the Class A Preference Shares were recognised initially at their fair values less transaction costs and have been accounted for as financial liabilities at amortised cost. Given that the indexation of the cash flows under the Class B Preference Shares to a 5% shareholding in Cell C results in them containing an embedded derivative which would otherwise need to be stripped out and accounted for separately, the Class B Preference Shares have been designated to be financial liabilities at fair value through profit or loss.

TPC borrowings – from other third parties

The airtime sale and repurchase from a third party represents a financing transaction, with the airtime as security.

The airtime sale and repurchase loan was recognised initially at its fair value less transaction costs and has been accounted for as a financial liability at amortised cost.

Credit facilities

    Facility utilised
Facility   2024
R’000 		  2023
R’000
General banking facility – Investec   293 018   70 722
General banking facility – RMB   128 000   32 000
Revolving Facility A – RMB   660 000   660 000
Revolving Facility B – Investec   80 000   240 000
Transaction Facility – RMB   350 000   —
African Bank   1 900 000   1 900 000
Total borrowings   3 411 018   2 902 722

For terms of these facilities, refer to note 3.2.2.

The Group did not default on any loans or breach any terms of the underlying agreements during the year.

The fair value of the borrowings approximates their carrying amounts due to these balances bearing interest at market related rates.

Changes in liabilities arising from financing activities

      Borrowings
due within
one year
R’000 		 Borrowings
due after
one year
R’000 		 Total
R’000 
Opening balance as at 1 June 2022     2 094 000  474 471  2 568 471 
Acquisition of subsidiaries interest-bearing borrowings     12 672  —  12 672 
Acquisition of subsidiaries non-interest-bearing borrowings     2 000  —  2 000 
Movement between current and non-current     (156 964) 156 964  — 
Loan forgiveness     —  (2 778) (2 778)
Loan modification     —  (7 047) (7 047)
Interest-bearing borrowings raised     701 479  1 207 966  1 909 445 
Interest accrued on interest-bearing borrowings     630 221  13 189  643 410 
Interest-bearing borrowings capital repaid     (422 832) —  (422 832)
Interest-bearing borrowings interest repaid     (630 221) —  (630 221)
Closing balance as at 31 May 2023     2 230 355  1 842 765  4 073 120 
Movement between current and non-current     917 027  (917 027) — 
Loan modification     —  (20 682) (20 682)
Interest-bearing borrowings raised     691 515  1 976 174  2 667 689 
Interest accrued on interest-bearing borrowings     805 762  28 830  834 592 
Interest-bearing borrowings capital repaid     (2 674 283) —  (2 674 283)
Interest-bearing borrowings interest repaid     (804 186) —  (804 186)
Closing balance as at 31 May 2024     1 166 190  2 910 060  4 076 250