|
Credit risk, or the risk of financial loss to the Group due to customers or counterparties not meeting their
contractual obligations, is managed through the application of credit approvals, limits and monitoring procedures.
The Group is exposed to credit risk on financial assets mainly in respect of those assets detailed in the financial
instruments table above. The carrying amounts of financial assets represent the maximum credit exposure. |
Expected credit losses |
|
|
|
|
The Group tracks significant increases in credit risk using information available to the Group regarding the
counterparty credit risk. Furthermore, this is supplemented by taking into account the performance of the
counterparty to the financial asset in question, as well as data from Moody's Analytics where applicable. |
The Group calculates its allowance for credit losses for financial assets measured at amortised cost using expected
credit losses (ECLs). |
ECLs were determined by the Group based on an unbiased, probability weighted amount that is determined
by evaluating a range of possible outcomes and, where relevant, reflecting the time value of money. In accordance
with the requirements of IFRS 9, ECL allowances are required to be measured in a way that incorporates
information available at the reporting date about past events, current conditions and forecasts of future economic
conditions. Each of these were used in calculating the ECL on the in-scope financial assets of the Group. Moody's
Analytics is used to incorporate forward looking information in the determination of ECLs. Moody's consider the
effect of various macro-economic phenomena and events such as Covid-19 to be embedded in the underlying
actual results of entities, and as a result reflected in the probability of default (PD) assumption of underlying ECL
methodologies. As such, no significant overlays or other adjustments, other than the macro-economic forecasts,
have been included in the current and prior financial year. |
Moody's Analytics produces a set of macro-economic forecasts for South Africa that considers the historical
accuracy of various forecasters to identify reliable sources. These are incorporated into their GCorr macro-economic
forecast set. Based on research conducted by Moody's Analytics, it recommends the use of its Baseline, Stronger
Near-Term Rebound (S1), and Moderate Recession (S3) forecast sets weighted 40%, 30% and 30% (2022: 40%, 30%,
30%) respectively for a forward looking adjustment for the purposes of IFRS 9. It considers both public and private
South African company defaults in this research. The methodology considers the industry of the asset and the
related volatility in comparison to the average volatility in the South African economy. |
Significant increases in credit risk can be evaluated with reference to movements in the balances between the
grouping categories used throughout this note. |
Management defines default as the situation when counterparties fail to make payments in a timely manner and
future payments are either suspended or unlikely. |
For counterparties where no external credit ratings are available, the Group has used a management-determined
credit risk rating model. The management of the Group performs a rigorous internal rating assessment process
of all external counterparty credit risk exposures and rates these exposures grouping them into the below five
groups which are then aligned to equivalent Moody's sourced default ratings. |
The groupings, as referenced throughout this note, are generally aligned to the staging requirements
of IFRS 9 as follows:
- Group 1 financial assets are typically Stage 1.
- Group 2 financial assets are typically Stage 1, with minor Stage 2 balances.
- Group 3 financial assets are typically Stage 1 and Stage 2 balances.
- Group 4 financial assets are typically Stage 3.
- Group 5 (POCI) financial assets are typically Stage 3.
|
The table below discloses the credit quality of the financial assets carried at amortised cost (excluding advances to
customers and trade receivables) of the Group: |
Group 1 |
|
1 428 338 |
2 769 084 |
Group 2 |
10 573 |
23 989 |
Group 3 |
10 373 |
60 835 |
Group 4 |
1 741 |
— |
Group 5 |
2 110 982 |
— |
Total |
3 562 007 |
2 853 908 |
Provision for impairment |
|
|
|
Balance at the beginning of the year |
265 723 |
331 772 |
Allowances made during the year |
735 099 |
261 475 |
Amounts utilised |
(287 999) |
(327 524) |
At 31 May |
712 823 |
265 723 |
(i) Cash and cash equivalents |
The Group places cash and cash equivalents with major banking groups and quality institutions that have high
credit ratings. The Group has the majority of its credit risk with Investec Bank Limited in line with its treasury
function. Investec Bank Limited has a credit rating of Ba2 based on the latest Moody's local currency long-term
issuer default ratings. |
The table below discloses the credit quality of the financial assets (excluding trade receivables) of the Group for
which external credit ratings are available. External credit ratings were based on the latest Moody's default ratings.
The counterparties were categorised as follows: |
Group 1: Financial institutions with a Moody's long-term debt issuer rating of Ba2 or better, or cash on hand.
Insignificant ECL. |
Counterparties with external credit rating
Group 1 |
|
1 302 770 |
2 723 591 |
Total |
1 302 770 |
2 723 591 |
(ii) Loans to associates and joint ventures |
The Group has provided loans to associates and joint ventures of the Group as part of specific transactions,
to satisfy operational as well as other requirements. These associates and joint ventures are located in South Africa.
The Group manages credit risk on this portfolio of loans by following strict protocols for the approval thereof, and
where possible obtaining appropriate security and other collateral. Management regularly reviews these loans and
uses an internal ratings-based system to track credit risk thereon. Refer to note 2.1.2. |
Critical accounting judgements and assumptions |
Funding provided to Cell C – originated credit-impaired |
The Group believed that at the time of providing the funding to Cell C, as part of the September 2022
Recapitalisation Transaction, such funding was considered to be credit impaired in line with IFRS 9 with reference to
Appendix A. Cell C was restructured and refinanced with the purpose of deleveraging its balance sheet, providing it
with liquidity with which to operate and grow its businesses and to position itself to achieve long-term success for
the benefit of its customers, employees, creditors, shareholders and its other stakeholders. Cell C utilised the TPC
Debt Funding to settle the claims of secured lenders by paying an amount of 20c to the rand. The face value of the
funding provided by TPC is 2.75 times the cash it advanced. This deep discount evidences incurred losses. Although
Cell C's financial plan reflects that the Group's funding will be repaid in full, there is execution risk related to the
achievement of the business plan. |
Accordingly, all funding provided to Cell C (including significant modifications of existing funding – refer to note 2.1.2 relating to the "Deferred repayment terms of an amount of R1.1 billion owing by Cell C to CEC") in relation to the
September 2022 Recapitalisation Transaction are classified as originated credit-impaired financial assets. |
The table below discloses the credit quality of the loans to associates and joint ventures of the Group for which no
external credit ratings are available. Equivalent credit ratings were based on the latest Moody's default ratings.
These ratings include forward looking adjustments for all relevant economic factors. Management defines default
as when counterparties fail to make payments and future payments are either suspended or unlikely. Management
writes off loans where they have actively pursued the debt and there is no indication of recovery. |
Group 1: Fully performing counterparties with a credit rating equivalent to a Moody's rating of B1 or higher. ECL
range up to 9.57% (2022: up to 7.63%). |
Group 2: Fully performing counterparties with a credit rating equivalent to a Moody's rating of between B1 and B2.
ECL range of 9.57% to 11.66% (2022: 7.63% to 9.26%). |
Group 3: Fully performing counterparties with a credit rating equivalent to a Moody's rating of between B2 and Ca.
ECL range of 11.66% to 53.39% (2022: 9.26% to 54.0%). |
Group 4: Counterparties who are considered to be in default and have an equivalent Moody's rating of Ca or lower.
ECL of 53.39% to 100% (2022: 54.0% to 100%). |
Group 5: Counterparties which have been designated as credit impaired or originated credit impaired loans.
ECL based on the credit rating of the underlying counterparty. |
31 May 2023 |
|
|
|
|
|
Loans advanced to counterparties without external ratings included in: |
|
|
|
|
Group 1 |
41 001 |
(1 251) |
39 750 |
(3.05) |
Group 3 |
4 884 |
(569) |
4 315 |
(11.65) |
Group 4 |
2 338 |
(2 338) |
— |
(100.00) |
Group 5 |
2 166 241 |
(55 259) |
2 110 982 |
(3.00) |
|
2 214 464 |
(59 417) |
2 155 047 |
|
31 May 2022
Loans advanced to counterparties without external ratings included in: |
|
|
|
|
Group 1 |
41 776 |
(432) |
41 344 |
(1.03) |
Group 3 |
8 000 |
(741) |
7 259 |
(9.26) |
|
49 776 |
(1 173) |
48 603 |
|
The loss allowances as at 31 May 2023 for loans to Cell C, which are included in group 5 above, are determined
as follows: |
Deferral Loan |
|
Lifetime ECL (originated credit impaired) |
970 562 |
(64 500) |
6 876 |
912 938 |
Debt Funding |
Lifetime ECL (originated credit impaired) |
1 123 204 |
— |
(59 991) |
1 063 213 |
Reinvestment Instrument |
Lifetime ECL (originated credit impaired) |
136 975 |
— |
(2 144) |
134 831 |
|
|
2 230 741 |
(64 500) |
(55 259) |
2 110 982 |
(iii) Loans receivable |
The Group has provided loans to third parties who are seen as product distributors, in order to expand its
distribution channels. These loans have been extended on various terms depending on management's assessment
of the business rationale for the provision thereof. The Group manages credit risk by following strict protocols for
the approval and monitoring of these loans, and where possible, obtaining appropriate security and other collateral.
Management regularly reviews these loans and uses an internal ratings-based system to track credit risk thereon. |
The table below discloses the credit quality of the loans receivable of the Group for which no external credit ratings
are available. Equivalent credit ratings were based on the latest Moody's default ratings. These ratings include
forward looking adjustments for all relevant economic factors. Management defines default as when counterparties
miss payments and future payments are either suspended or unlikely. Management writes off loans where they
have actively pursued the debt and there is no indication of recovery. |
Group 1: Fully performing counterparties with a credit rating equivalent to a Moody's rating of B1 or higher. ECL
range up to 9.57% (2022: up to 7.63%). |
Group 2: Fully performing counterparties with a credit rating equivalent to a Moody's rating of between B1 and B2.
ECL range of 9.57% to 11.66% (2022: 7.63% to 9.26%). |
Group 3: Fully performing counterparties with a credit rating equivalent to a Moody's rating of between B2 and Ca.
ECL range of 11.66% to 53.39% (2022: 9.26% to 54.0%). |
Group 4: Counterparties who are considered to be in default and have an equivalent Moody's rating of Ca or lower.
ECL of 53.39% to 100% (2022: 54.0% to 100%). |
Group 5: Counterparties which have been designated as credit impaired or originated credit impaired loans.
ECL based on the credit rating of the underlying counterparty. |
The loss allowance as at 31 May 2023 for loans receivable is determined as follows: |
31 May 2023 |
|
|
|
|
|
Loans advanced to counterparties without external ratings included in: |
|
|
|
|
Group 1 |
93 647 |
(7 829) |
85 818 |
(8.36) |
Group 2 |
11 692 |
(1 119) |
10 573 |
(9.57) |
Group 3 |
7 139 |
(1 081) |
6 058 |
(15.14) |
Group 4 |
8 671 |
(6 930) |
1 741 |
(79.92) |
|
121 149 |
(16 959) |
104 190 |
|
31 May 2022
Loans advanced to counterparties without external ratings included in: |
|
|
|
|
Group 1 |
4 242 |
(93) |
4 149 |
(2.19) |
Group 2 |
25 894 |
(1 905) |
23 989 |
(7.36) |
Group 3 |
60 818 |
(7 242) |
53 576 |
(11.91) |
Group 4 |
4 984 |
(4 984) |
— |
(100.00) |
|
95 938 |
(14 224) |
81 714 |
|
(iv) Advances to customers |
Advances to customers represent the activities of the Group's subsidiary, CEC, which provides financing for cellular
handsets. This customer base is widely dispersed throughout South Africa and no significant concentrations of
credit risk have been noted. |
The business model of these financing arrangements exposes the Group to the credit risk of the population of the
underlying subscribers who are all customers of Cell C Service Provider Proprietary Limited and other business
partners of CEC. |
Management has put in place credit risk policies as well as stringent customer acceptance policies and limits
to manage the credit risk exposure at deal initiation. Subsequent to deal initiation, credit risk at a subscriber level
is managed through a combination of policies and procedures which limit the customers' ability to incur further
debt should their accounts not be up to date. |
The Group calculates an ECL for the instruments in this portfolio in accordance with the general approach in IFRS 9
using a provision matrix model (refer to detail under (v) Trade and other receivables) which takes into account,
among others: roll rates; past performance, incorporated through staging, default and curing definitions; and
applicable forward looking indicators in line with Group policy. The Group continually refines and improves the
model applied to take into account new information and additional data that becomes available as internal
processes evolve. These improvements are accounted for prospectively as changes to the ECL estimate when
they arise. |
The loss allowance as at 31 May 2023 for advances to customers is determined as follows: |
31 May 2023 |
|
|
|
|
|
Advances to customers without external ratings: |
|
|
|
|
Collateralised handset financing receivables* |
— |
— |
— |
— |
Handset financing and subscription income sharing receivables |
|
|
|
|
Fully performing |
2 031 224 |
(55 097) |
1 976 127 |
(2.71) |
Past due by 1 to 30 days |
116 118 |
(24 598) |
91 520 |
(21.18) |
Past due by 31 to 60 days |
48 833 |
(18 801) |
30 032 |
(38.50) |
Past due by more than 60 days |
643 006 |
(483 483) |
159 523 |
(75.19) |
|
2 839 181 |
(581 979) |
2 257 202 |
|
31 May 2022
Advances to customers without external ratings:
Collateralised handset financing receivables* |
67 355 |
(782) |
66 573 |
(1.16) |
Handset financing and subscription income sharing receivables |
|
|
|
|
Fully performing |
1 415 881 |
(50 476) |
1 365 405 |
(3.56) |
Past due by 1 to 30 days |
112 748 |
(34 181) |
78 567 |
(30.32) |
Past due by 31 to 60 days |
50 325 |
(19 375) |
30 950 |
(38.50) |
Past due by more than 60 days |
270 685 |
(144 642) |
126 043 |
(53.44) |
|
1 916 994 |
(249 456) |
1 667 538 |
|
* |
Handset financing receivables related to previous commercial arrangement with Cell C. |
Once the recoverability of these receivables comes into question, the amount is handed over to external debt
collectors and if not recovered within the time frame detailed in our Collection Policy, is written off. |
(v) Trade and other receivables |
The Group has a diversified customer base and policies are in place to ensure sales are made to customers with
an appropriate credit history and payment history. All of the Group's revenues are generated in South Africa.
Individual credit limits are set for each customer and the utilisation of these credit limits is monitored regularly.
Customers cannot exceed their set credit limit without specific Senior Management approval. Such approval
is assessed and granted on a case by case basis. Management regularly reviews the receivables age analysis and
follows up on long-outstanding receivables. The Group's customer base has been aggregated into groupings that
represent, to a large degree, how the Group manages its receivables and also illustrates the spread of credit risk.
Within these aggregated groupings, the Group's exposure to credit risk is made up of banks and other financial
institutions, major retailers, independent and informal retail customers, petroleum forecourts, municipalities,
private utilities and cellular networks. The balance of the customer base is widely dispersed. |
Provision matrix (including advances to customers) |
ECLs are calculated by applying a loss ratio to the aged balance of receivables at each reporting date. The loss ratio
is calculated according to the ageing/payment profile of sales by applying historic/proxy write-offs to the payment
profile of the sales population. In instances where there was no evidence of historical write-offs, management used
a proxy write-off for similar receivables obtained from external credit rating agencies. Receivable balances have
been grouped so that the ECL calculation is performed on groups of receivables with similar risk characteristics and
ability to pay. |
Exposures are mainly segmented by customer type, i.e. banks and other financial institutions, major retailers,
independent and informal retail customers, petroleum forecourts, municipalities, private utilities and cellular
networks. This is done to allow for risk differentiation. Similarly, the sales population selected to determine the
ageing/payment profile of the sales is representative of the entire population and in line with future payment
expectations. |
The PD and LGD are then adjusted for forward looking information to determine a point-in-time adjustment.
Forward looking information is also used to derive a base, upside and downside scenario given multiple forecasts
under the guidance of Moody's. These assumptions are applied to determine the ECL for the portfolio of receivables
at the reporting date to the extent that there is a strong correlation between the forward looking information and
the ECL. |
In most instances, no material adjustments were required to accommodate forward looking information, as the
majority of receivables were settled within a relatively short period (under 60 days on average). Macro-economic
forecasts have been included in the ECL calculation for advances to customers. |
The Group used 60 to 84 months' sales data to determine the payment profile of the sales. Where the Group has
information about actual historical write-offs, actual write-offs have been used to determine a historic loss ratio.
Alternatively, management has used a proxy write-off, based on management's best estimate including information
obtained from an external ratings agency (Moody's). The Group has considered quantitative forward looking
information such as the core inflation rate. Qualitative assessments have also been performed, of which the impact
was found to be immaterial. |
Management considers trade receivables aged in excess of 60 days (advances to customers)/90 days (trade
receivables) past due (where the excessive ageing is not caused by administrative delays that are within the control
of the Group), and those handed over to the Group's attorneys for legal collection processes, to be in default and
accordingly increases the allowance for impairment raised on these receivables. This policy is applied to all
receivables, other than receivables for starter packs, municipalities, private utilities or specific circumstances where
management has rebutted the presumption that a customer is in default when 90 days past due as a result of the
inherent nature of the product/transaction being undertaken which follows a business cycle in excess thereof.
Receivables for starter packs are considered to be in default where no income has been earned from activation
or ongoing revenue in the last three months and the receivable has aged in excess of the anticipated repayment
cycle. Receivables from municipalities and private utilities are considered to be in default where the net exposure
to the counterparty after deduction of the collateral held has aged in excess of 12 months, or where handed over
to the Group's attorneys for legal collection purposes. |
Trade receivables are written off when there is no reasonable expectation of recovery. This is assessed individually
by each operation and includes, for example, where the trade receivables have been handed over for collection and
remain outstanding or the debtor has entered bankruptcy. Other receivables and other financial assets are
individually assessed by management based on each situation's unique facts and circumstances and are written off
when management believes that there is no reasonable expectation of recovery. |
The loss allowance as at 31 May 2023 for trade receivables and other receivables to which the provision matrix has
been applied is determined as follows: |
Ageing and impairment analysis |
31 May 2023 |
|
|
|
|
|
Fully performing receivables |
|
|
|
|
Trade receivables arising on revenue from contracts with customers |
|
|
|
|
Banks and other financial institutions |
109 931 |
(13) |
109 918 |
(0.01) |
Independent and informal retail customers |
247 834 |
(466) |
247 368 |
(0.19) |
Formal market retail customers |
304 899 |
(865) |
304 034 |
(0.28) |
Customers in the petroleum sector |
80 745 |
(64) |
80 681 |
(0.08) |
Receivables for starter packs |
39 793 |
(28) |
39 765 |
(0.07) |
Cell C |
4 212 |
(10) |
4 202 |
(0.24) |
Other cellular networks |
530 557 |
(23) |
530 534 |
(0.00) |
Municipalities and private utilities |
63 335 |
— |
63 335 |
— |
Trade receivables arising on financing transactions |
|
|
|
|
Cell C |
248 524 |
(2 055) |
246 469 |
(0.83) |
Other |
93 319 |
(369) |
92 950 |
(0.40) |
Sundry receivables |
202 714 |
(54 468) |
148 246 |
(26.87) |
Receivables from revenue recognised on fixed term contracts |
130 339 |
— |
130 339 |
— |
Past due receivables |
|
|
|
|
Trade receivables arising on revenue from contracts with customers |
|
|
|
|
Banks and other financial institutions |
|
|
|
|
Past due by 1 to 30 days |
203 |
— |
203 |
— |
Past due by 31 to 60 days |
— |
— |
— |
— |
Past due by 61 to 90 days |
— |
— |
— |
— |
Past due by more than 90 days |
— |
— |
— |
— |
Independents and informal retail customers |
|
|
|
|
Past due by 1 to 30 days |
13 692 |
(156) |
13 536 |
(1.14) |
Past due by 31 to 60 days |
1 506 |
(344) |
1 162 |
(22.84) |
Past due by 61 to 90 days |
2 028 |
(581) |
1 447 |
(28.65) |
Past due by more than 90 days |
21 106 |
(15 141) |
5 965 |
(71.74) |
Formal market retail customers |
|
|
|
|
Past due by 1 to 30 days |
4 855 |
(5) |
4 850 |
(0.10) |
Past due by 31 to 60 days |
22 |
— |
22 |
— |
Past due by 61 to 90 days |
3 614 |
— |
3 614 |
— |
Past due by more than 90 days |
2 267 |
(2 267) |
— |
(100.00) |
Customers in the petroleum sector |
|
|
|
|
Past due by 1 to 30 days |
74 |
(2) |
72 |
(2.70) |
Past due by 31 to 60 days |
3 |
— |
3 |
— |
Past due by 61 to 90 days |
353 |
(10) |
343 |
(2.83) |
Past due by more than 90 days |
2 266 |
(2 266) |
— |
(100.00) |
Receivables for starter packs |
|
|
|
|
Past due by 1 to 30 days |
34 316 |
(100) |
34 216 |
(0.29) |
Past due by 31 to 60 days |
208 |
— |
208 |
— |
Past due by 61 to 90 days |
3 |
— |
3 |
— |
Past due by more than 90 days |
360 |
(360) |
— |
(100.00) |
Cell C |
|
|
|
|
Past due by 1 to 30 days |
2 344 |
(11) |
2 333 |
(0.47) |
Past due by 31 to 60 days |
6 440 |
(48) |
6 392 |
(0.75) |
Past due by 61 to 90 days |
— |
— |
— |
— |
Past due by more than 90 days |
279 |
(279) |
— |
(100.00) |
Other cellular networks |
|
|
|
|
Past due by 1 to 30 days |
40 |
— |
40 |
— |
Past due by 31 to 60 days |
97 |
— |
97 |
— |
Past due by 61 to 90 days |
48 |
— |
48 |
— |
Past due by more than 90 days |
400 |
(400) |
— |
(100.00) |
Municipalities and private utilities |
|
|
|
|
Past due by 1 to 30 days |
16 113 |
— |
16 113 |
— |
Past due by 31 to 60 days |
25 595 |
— |
25 595 |
— |
Past due by 61 to 90 days |
44 475 |
— |
44 475 |
— |
Past due by more than 90 days |
104 832 |
(955) |
103 877 |
(0.91) |
|
2 343 741 |
(81 286) |
2 262 455 |
(3.47) |
31 May 2022 |
|
|
|
|
|
Fully performing receivables |
|
|
|
|
Trade receivables arising on revenue from contracts with customers |
|
|
|
|
Banks and other financial institutions |
78 751 |
(9) |
78 742 |
(0.01) |
Independent and informal retail customers |
526 889 |
(1 887) |
525 002 |
(0.36) |
Formal market retail customers |
152 472 |
(550) |
151 922 |
(0.36) |
Customers in the petroleum sector |
68 655 |
(20) |
68 635 |
(0.03) |
Receivables for starter packs |
51 549 |
(72) |
51 477 |
(0.14) |
Cell C |
3 782 |
(14) |
3 768 |
(0.37) |
Other cellular networks |
65 844 |
(3) |
65 841 |
(0.00) |
Municipalities and private utilities |
86 419 |
— |
86 419 |
— |
Trade receivables arising on financing transactions |
|
|
|
|
Cell C |
2 557 395 |
(26 595) |
2 530 800 |
(1.04) |
Other |
14 389 |
(59) |
14 330 |
(0.41) |
Sundry receivables |
193 414 |
(870) |
192 544 |
(0.45) |
Receivables from revenue recognised on fixed term contracts |
134 036 |
— |
134 036 |
— |
Past due receivables |
|
|
|
|
Trade receivables arising on revenue from contracts with customers |
|
|
|
|
Banks and other financial institutions |
|
|
|
|
Past due by 1 to 30 days |
445 |
— |
445 |
— |
Past due by 31 to 60 days |
13 |
— |
13 |
— |
Past due by 61 to 90 days |
— |
— |
— |
— |
Past due by more than 90 days |
5 726 |
(5 726) |
— |
(100.00) |
Independents and informal retail customers |
|
|
|
|
Past due by 1 to 30 days |
75 990 |
(148) |
75 842 |
(0.19) |
Past due by 31 to 60 days |
4 892 |
(133) |
4 759 |
(2.72) |
Past due by 61 to 90 days |
1 553 |
(130) |
1 423 |
(8.37) |
Past due by more than 90 days |
18 584 |
(18 584) |
— |
(100.00) |
Formal market retail customers |
|
|
|
|
Past due by 1 to 30 days |
140 |
— |
140 |
— |
Past due by 31 to 60 days |
— |
— |
— |
— |
Past due by 61 to 90 days |
3 |
(1) |
2 |
(33.33) |
Past due by more than 90 days |
5 609 |
(5 609) |
— |
(100.00) |
Customers in the petroleum sector |
|
|
|
|
Past due by 1 to 30 days |
1 249 |
— |
1 249 |
— |
Past due by 31 to 60 days |
70 |
— |
70 |
— |
Past due by 61 to 90 days |
16 |
— |
16 |
— |
Past due by more than 90 days |
3 548 |
(3 548) |
— |
(100.00) |
Receivables for starter packs |
|
|
|
|
Past due by 1 to 30 days |
21 297 |
(201) |
21 096 |
(0.94) |
Past due by 31 to 60 days |
1 171 |
(4) |
1 167 |
(0.34) |
Past due by 61 to 90 days |
1 |
— |
1 |
— |
Past due by more than 90 days |
67 |
(67) |
— |
(100.00) |
Cell C |
|
|
|
|
Past due by 1 to 30 days |
2 794 |
(25) |
2 769 |
(0.89) |
Past due by 31 to 60 days |
929 |
(8) |
921 |
(0.86) |
Past due by 61 to 90 days |
— |
— |
— |
|
Past due by more than 90 days |
75 |
(75) |
— |
(100.00) |
Other cellular networks |
|
|
|
|
Past due by 1 to 30 days |
56 764 |
— |
56 764 |
— |
Past due by 31 to 60 days |
— |
— |
— |
— |
Past due by 61 to 90 days |
— |
— |
— |
— |
Past due by more than 90 days |
— |
— |
— |
— |
Municipalities and private utilities |
|
|
|
|
Past due by 1 to 30 days |
28 536 |
— |
28 536 |
— |
Past due by 31 to 60 days |
10 656 |
— |
10 656 |
— |
Past due by 61 to 90 days |
6 736 |
— |
6 736 |
— |
Past due by more than 90 days |
47 070 |
(2 875) |
44 195 |
(6.11) |
|
4 227 529 |
(67 213) |
4 160 316 |
(1.59) |
|
|
Trade receivables |
Provision for impairment of receivables |
|
|
|
Balance at the beginning of the year |
66 343 |
54 772 |
Allowances made during the year |
(12 518) |
30 887 |
Amounts utilised** |
(27 007) |
(19 316) |
At 31 May |
26 818 |
66 343 |
** |
Expected credit losses utilised in the write-off of long outstanding trade and loans receivable, where collection avenues were exhausted. |
Credit risk sensitivity analysis |
The receivables are mainly exposed to the change in the probability of default of Cell C Limited, as well as changes
in the non-credit adjusted effective interest rates. The following table details the Group's sensitivity to a change in
these parameters. |
|
Probability of default of Cell C |
|
|
Debt funding |
Non-credit adjusted EIR |
(16 613)/15 673 |
|
Probability of default of Cell C |
|
Reinvestment instrument |
Non-credit adjusted EIR |
(1 669)/1 582 |
|
Probability of default of Cell C |
|
Deferral loan |
Non-credit adjusted EIR |
(6 374)/6 797 |
* |
Relates to a 10% increase/decrease in the probability of default. |
The effect of credit risk on hedging instruments |
On 7 October 2020, TPC entered into an interest rate swap agreement in respect of its variable rate facility
agreement in order to hedge its interest rate risk (refer to note 3.7 for more detail). |
By using derivative financial instruments to hedge exposures to changes in interest rates, TPC also exposes itself
to credit risk of the derivative counterparty, which is not offset by the hedged item. TPC minimises counterparty
credit risk in derivative instruments by entering into transactions with high-quality counterparties. |
At inception of each hedge, it was determined that the effects of credit risk are not expected to dominate the value
changes arising from the hedging relationship as all relevant metrics to demonstrate the existence of an economic
relationship have been satisfied. |
At each subsequent reporting date, hedge effectiveness for each hedging relationship will be assessed and the
effects of credit risk will be considered. |
|