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Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due, both under normal and stressed circumstances.
The Group's objective is to maintain prudent liquidity risk management by maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed credit lines available. Cash flow forecasting is performed in the operating entities of the Group to ensure sufficient cash to meet operational needs, while maintaining sufficient headroom to ensure that borrowing limits (where applicable) are not breached.
Surplus cash held by the operating entities over and above the balance required for working capital management is transferred to Group treasury. Group treasury invests surplus cash in interest-bearing accounts, identifying instruments with sufficient liquidity to provide adequate headroom as determined by the above mentioned forecasts.
Maturity of financial liabilities
The table below analyses the undiscounted cash flows for the Group's financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date.
|
| Notes |
| Less than
one month
or on
demand
R'000 |
More than
one month
but not
exceeding
one year
R'000 |
Payable in:
More than
one year
but not
exceeding
two years
R'000 |
More than
two years
but not
exceeding
five years
R'000 |
More than
five years
R'000 |
| 2021 |
|
|
|
|
|
| |
| Interest-bearing borrowings |
3.6.2 |
| 3 138 |
1 710 718 |
2 778 |
– |
– |
| Non-interest-bearing borrowings |
3.6.2 |
| 989 |
– |
– |
– |
– |
| Trade and other payables* |
3.6.1 |
| 2 148 300 |
3 739 653 |
– |
– |
– |
| Lease liabilities |
3.9 |
| 2 341 |
33 331 |
36 197 |
9 346 |
– |
| Derivative liability |
3.7 |
| – |
201 678 |
– |
– |
– |
| Financial liability at fair value through profit or loss |
3.7 |
| 564 |
– |
– |
– |
– |
| Financial guarantee contracts |
3.6.3 |
| 104 950 |
671 |
– |
– |
– |
| Bank overdraft |
3.5.4 |
| 118 |
– |
– |
– |
– |
| Total |
|
| 2 260 400 |
5 686 051 |
38 975 |
9 346 |
– |
| 2020 |
|
|
|
|
|
| |
| Interest-bearing borrowings |
3.6.2 |
| 5 005 |
2 320 703 |
2 778 |
– |
– |
| Non-interest-bearing borrowings |
3.6.2 |
| – |
13 952 |
– |
– |
– |
| Trade and other payables* |
3.6.1 |
| 2 598 265 |
1 955 394 |
– |
– |
– |
| Lease liabilities |
3.9 |
| 2 999 |
66 909 |
41 513 |
48 834 |
– |
| Derivative liability |
3.7 |
| – |
214 559 |
– |
– |
– |
| Financial liability at fair value through profit or loss |
3.7 |
| 357 562 |
– |
– |
– |
– |
| Financial guarantee contracts |
3.6.3 |
| 87 603 |
113 871 |
– |
– |
– |
| Bank overdraft |
3.5.4 |
| 192 |
– |
– |
– |
– |
| Total |
|
| 3 051 626 |
4 685 388 |
44 291 |
48 834 |
– |
| * |
Trade and other payables exclude non-financial instruments, being VAT, deferred revenue and certain amounts included within accruals and sundry creditors. |
For details of the maturity of the financial asset at fair value through other comprehensive income at the statement of financial position date to the contractual maturity date, refer to note 3.3.
As part of the restructure of the debt into Cell C by third-party lenders, The Prepaid Company was required to provide liquidity support to Magnolia Cellular Investment 2 (RF) Proprietary Limited (SPV2), which is 100% held by 3C Telecommunications Proprietary Limited, of up to USD80 million, which liquidity support was to be provided over 24 months in the form of subordinated funding to SPV2. Oger Telecoms contributed USD36 million of the aforesaid USD80 million, thus reducing The Prepaid Company's obligation in this regard to a maximum of USD44 million. As at 31 May 2021, the Group has contributed the full USD44 million to SPV2.
Group facilities
The Group has access to the following facilities in order to meet its liquidity needs:
| Facility |
Borrower |
Investec |
Rand
Merchant
Bank |
Value
R'000 |
Interest
rate |
Interest
period |
Repayment
date |
| Mezzanine facility |
Comm Equipment Company Proprietary Limited |
100% |
– |
410 532 |
Prime plus 2% |
Monthly |
31 August 2021* |
| Facility A |
The Prepaid Company Proprietary Limited |
100% |
– |
1 450 000 |
Prime less 0.5% |
Monthly |
31 March 2022** |
| Guarantee facility |
The Prepaid Company Proprietary Limited |
100% |
– |
50 000 |
Prime, if guarantee called |
Monthly, if guarantee called |
28 February 2022 |
|
|
|
|
| 1 910 532 |
|
| |
| * |
Subsequent to year-end, the Group has renewed these facilities until 31 March 2022. Refer to note 9.1. |
| ** |
Subsequent to year-end, the Group has renewed this facility until 30 September 2022. Refer to note 9.1. |
- The working capital loan facilities available to The Prepaid Company at year-end amounted to R1.45 billion (2020: R1.8 billion), of which R1.3 billion (2020: R1.586 billion) had been utilised. Refer to note 3.6.2.
- The working capital loan facility available to The Prepaid Company at year-end utilised portion must reduce by R50 million per month, with effect from May 2021, down to R1.005 billion by
31 March 2022.
- The following debt covenants applied to the TPC facilities with Investec:
- debt to EBITDA ratio must be less than 2.5 times;
- the sum of 70% of debtors and 80% of stock must exceed the utilised value of the facility, and must exceed 75% of the utilised facility at year-end and half-year-end; and
- BLT's market capitalisation must exceed R2 billion.
The Group has not been in breach in respect of these covenants.
- The guarantee facility had not been called on at year-end.
The Group has pledged certain securities in respect of this facility. Refer to notes 3.5.2 and 4.4.
- Comm Equipment Company Proprietary Limited (CEC) has a financing facility with Investec Bank of R410.5 million (2020: R877.2 million with both Rand Merchant Bank Limited and Investec Bank). This facility is restricted for use by CEC. The utilised portion of the facility at year-end amounted to R410.5 million (2020: R716.3 million). Refer to note 3.6.2.
- The following debt covenants applied to the CEC facilities with Investec:
- EBITDA to total finance costs ratio must be greater than 2.5 times; and
- total of Cell C Group liabilities and subscriber receivables amount to debt ratio must be greater than 1.5.
The Group has not been in breach in respect of these covenants.
- The Group has renewed the mezzanine facility and facility A.
Pledges, guarantees and sureties
- The shares in CEC have been pledged as security for the R410.5 million Investec Bank facilities. Blue Label Telecoms and The Prepaid Company have issued guarantees to the value of
R150 million for this facility.
- The Group has overdraft, credit card and debit order collection facilities with FNB, a division of First National Bank Limited (FNB). These facilities have been secured through Group cross-sureties issued by the Company and certain subsidiary companies. These facilities, which remain substantially unchanged from the prior year, comprised an overdraft facility of R19.85 million, credit card facility of R1.3 million and a debit order settlement facility of R11 million. At 31 May 2021, the overdraft facility was unutilised.
- Guarantees to the value of R2.1 billion (2020: R1.6 billion) are issued by the Group's bankers in favour of suppliers on behalf of the Group. The Group does not have access to this portion of its facilities while amounts owing to suppliers are outstanding.
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