| 3. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.5 | FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Changes in the instruments are as follows:
SURETY LOANS RECEIVABLESurety loans relate to the personal sureties that B Levy and M Levy signed for the US dollar denominated loan owed by 2DFine Holdings Mauritius to Gold Label Investments Proprietary Limited. Their liability was previously limited to the difference between the loan owing to Gold Label Investments Proprietary Limited and the value of 16.95% of the shares in Oxigen Services India Private Limited (“Oxigen Services”) and 17.29% of the shares in Oxigen Online Services India Private Limited (Oxigen Online). Effectively on 1 December 2025, the loan was converted from USD into ZAR and bears interest at prime less 1.5%, payable annually each November, with the final instalment due on 30 November 2030. On the modification date, the loan was derecognised as a financial instrument at fair value and re-recognised as a loan receivable measured at amortised cost. CLASS B PREFERENCE SHARESTPC issued Class B Preference Shares to the funders for a nominal issue price. 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 FVTPL. The preference shares are initially recognised by the Group at fair value and subsequently measured at FVTPL. Prior to the pre-listing restructuring of Cell C, the fair value of Cell C was zero, resulting in the Class B Preference Shares being settled at zero. ESCROW RECEIVABLEA risk margin held in Escrow covered any shortfall on sold debtors, with the balance released to CEC once the subscription agreement matured. The receivable has been derecognised upon the disposal of Cell C (including CEC). Any gains or losses arising from changes in fair value will be included in profit or loss. The fair value of this financial asset was determined through the discounting of post churn cash flows after taking into account the credit risk of the books sold. LESAKA DERIVATIVE LIABILITYAhead of the pre-listing restructuring of Cell C, TPC entered into an agreement with Lesaka, giving Lesaka the right to require TPC to purchase its Cell C shares for R50 million. Lesaka's shareholding in Cell C after the restructuring was 0.025%. Lesaka exercised its put option prior to 30 November 2025, giving rise to a financial liability. The fair value of this financial liability was determined with reference to the fair value of R26.50 per Cell C share and the agreed purchase price. On 11 December 2025, TPC paid R50 million to Lesaka for the purchase of 0.025% of Cell C ordinary shares, thereby settling the financial liability. NEDBANK DERIVATIVE LIABILITYAhead of the pre-listing restructuring of Cell C, TPC entered into an agreement with Nedbank, giving Nedbank the right to require TPC to purchase its Cell C shares for R96 million. Nedbank's shareholding in Cell C after the restructuring was 0.035%. Nedbank exercised its put option prior to 30 November 2025, giving rise to a financial liability. The fair value of this financial liability was determined with reference to the fair value of R26.50 per Cell C share and the agreed purchase price. On 4 December 2025, TPC paid R96 million to Nedbank for the purchase of 0.035% of Cell C ordinary shares, thereby settling the financial liability. SISONKE DERIVATIVE LIABILITYThe loan account linked to the 15.95% stake in Cell C that was sold to Sisonke (refer to Note 2.2), has been accounted for as an ‘in-substance' written call option (derivative liability). Its fair value has been determined using the Monte Carlo simulation of a Geometric Brownian Motion process. The variables include expected risk-free interest rates, and the anticipated volatility and dividend yield of the Cell C share. Since the loan account is taken into account in determining the fair value of the derivative liability, the loan is not separately accounted for as a loan receivable. TPC's economic interest in Cell C that is accounted for includes the 15.95% stake and Sisonke's right to retain 10% of any dividends accruing to them during the loan period is reflected in the fair value of the derivative liability. The initial fair value yielded a loss of R140 million which was recognised in other expenses in the statement of comprehensive income. At 31 May 2026 there is no subsequent movement in the derivative value due to Cell C's share price being unchanged from exercise price and no dividends declared to date. As there are significant unobservable inputs to this valuation, the derivative liability has been classified as level 3. A sensitivity analysis was performed on the Sisonke derivative liability as illustrated below:
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