Critical accounting judgements and assumptions
(a) Classification of significant joint arrangements
The Group exercises judgement in determining the classification of its joint arrangements.
(b) Assessment of investment in associates and joint ventures for impairment
An investment in an associate or joint venture is tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
The Group assesses at each reporting date whether such indicators exist. Similarly, the investment in an associate
or joint venture is subsequently reassessed for indications of impairment loss previously recognised that may no
longer exist. If there is an indication that an impairment loss has reversed, the Group is required to estimate the
recoverable amount of the previously impaired investment. The impairment loss is reversed if the recoverable
amount exceeds its carrying amount. The recoverable amounts of the investment in an associate or joint venture
are determined based on value-in-use calculations. Where such calculations are performed, it would require the use
of estimates.
(c) Classification of significant associates
The Group performs control assessments and determines the classification of its significant associates. Refer
to note 2.2.1.
The Group holds the following investments in and loans to associates and joint ventures:
| |
|
Cost and share of reserves |
Loans |
Investments and loans |
| |
|
31 May 2024
R’000 |
|
31 May 2023
R’000 |
|
31 May 2024
R’000 |
|
31 May 2023
R’000 |
|
31 May 2024
R’000 |
|
31 May 2023
R’000 |
|
| Cell C Limited |
|
— |
|
— |
|
2 359 065 |
|
2 110 982 |
|
2 359 065 |
|
2 110 982 |
|
| Other associates |
|
64 821 |
|
58 731 |
|
17 560 |
|
9 282 |
|
82 381 |
|
68 013 |
|
| Other joint ventures |
|
33 512 |
|
24 454 |
|
36 394 |
|
34 783 |
|
69 906 |
|
59 237 |
|
| |
|
98 333 |
|
83 185 |
|
2 413 019 |
|
2 155 047 |
|
2 511 352 |
|
2 238 232 |
|
| Disclosed as: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| – Non-current assets |
|
98 333 |
|
83 185 |
|
1 967 246 |
|
1 913 645 |
|
2 065 579 |
|
1 996 830 |
|
| – Current assets |
|
— |
|
— |
|
445 773 |
|
241 402 |
|
445 773 |
|
241 402 |
|
Loans to associates and joint ventures
| |
|
|
|
Total loans |
Current |
Non-current |
|
Effective shareholding |
Payable |
Interest
rate |
2024
R’000 |
2023
R’000 |
2024
R’000 |
2023
R’000 |
2024
R’000 |
2023
R’000 |
| Cell C Limited1 |
63.19% |
3 |
3 |
2 359 065 |
2 110 982 |
424 490 |
221 670 |
1 934 575 |
1 889 312 |
| Blu Train Proprietary Limited2 |
64.68% |
On demand |
Linked to prime |
13 171 |
4 970 |
— |
— |
13 171 |
4 970 |
| I Talk Financial Services Proprietary Limited |
30.38% |
On demand |
0% |
3 997 |
4 000 |
3 997 |
4 000 |
— |
— |
| I Talk Holdings Proprietary Limited |
40.50% |
On demand |
Linked to prime |
19 500 |
19 363 |
— |
— |
19 500 |
19 363 |
| Mobii Systems Proprietary Limited |
29.9% |
On demand |
0% |
4 394 |
4 315 |
4 394 |
4 315 |
— |
— |
| Mobile Macs Proprietary Limited |
50% |
On demand |
Prime + 2% |
12 189 |
4 628 |
12 189 |
4 628 |
— |
— |
| T3 Telecoms SA |
50% |
On demand |
0% |
703 |
6 789 |
703 |
6 789 |
— |
— |
| |
|
|
|
2 413 019 |
2 155 047 |
445 773 |
241 402 |
1 967 246 |
1 913 645 |
| 1 |
Refer to note 2.2.1 for details on the control assessment of Cell C Limited. Refer to note 3.2.1 for details of the treatment of the loans. |
| 2 |
The Group does not control Blu Train, as it does not control the Board of Directors. |
| 3 |
Refer to the “Loans receivable from Cell C” table on the following page. |
All loans with an on-demand feature approximate fair value.
Loans receivable from Cell C
| |
|
Debt
funding*
2024
R’000 |
Reinvestment
instrument**
2024
R’000 |
Deferral
loan***
2024
R’000 |
Total
2024
R’000 |
| Opening balance as at 1 June 2023 |
|
1 063 213 |
134 831 |
912 938 |
2 110 982 |
| Interest accrued |
|
536 757 |
63 066 |
101 859 |
701 682 |
| Payments received |
|
— |
— |
(332 387) |
(332 387) |
| Allowance (loss)/gain |
|
(135 636) |
(11 603) |
26 027 |
(121 212) |
| Closing balance as at 31 May 2024 |
|
1 464 334 |
186 294 |
708 437 |
2 359 065 |
| Credit-adjusted effective interest rate (%) |
|
31.25 |
31.8 |
12.67 |
|
| * |
The loan bears no interest for the first 24 months following the recapitalisation date. From October 2024, the total capital
amount bears interest at a fixed rate of 10% per annum until month 42, and thereafter the outstanding amount bears interest at
prime plus 3% until month 66, payable monthly. |
| ** |
The loan bears no interest for the first 24 months following the recapitalisation date and from October 2024 the total capital
amount bears interest at a fixed rate of 10% per annum. Interest payments are payable monthly. |
| *** |
Interest on this loan is being recognised using a credit-adjusted effective interest rate of 12.67%. The credit-adjusted effective
interest rate reflects the initial estimate of lifetime expected credit losses. This means that CEC will only recognise the cumulative
changes (both favourable and unfavourable) in the initial estimate of lifetime expected credit losses as a loss allowance. |
| Investment in Principal activity Country of incorporation |
|
Associate
Cell C Limited
Network provider
South Africa |
|
Other associates* |
|
Other joint ventures* |
|
Total |
| |
|
31 May 2024
R’000 |
|
31 May 2023
R’000 |
|
31 May 2024
R’000 |
|
31 May 2023
R’000 |
|
31 May 2024
R’000 |
|
31 May 2023
R’000 |
|
31 May 2024
R’000 |
|
31 May 2023
R’000 |
| Cost and share of reserves at the beginning of the year |
|
— |
|
— |
|
58 731 |
|
53 536 |
|
24 454 |
|
22 611 |
|
83 185 |
|
76 147 |
| Acquisition of associates and joint ventures |
|
— |
|
— |
|
— |
|
— |
|
— |
|
6 373 |
|
— |
|
6 373 |
| Share of (losses)/profits from associates and joint ventures |
|
— |
|
(1 328 767) |
|
6 358 |
|
3 550 |
|
9 058 |
|
(4 530) |
|
15 416 |
|
(1 329 747) |
| Share of results after tax |
|
— |
|
(1 328 767) |
|
6 358 |
|
3 550 |
|
9 058 |
|
(4 530) |
|
15 416 |
|
(1 329 747) |
| Foreign currency translation reserve |
|
— |
|
— |
|
(268) |
|
1 645 |
|
— |
|
— |
|
(268) |
|
1 645 |
| Additional investment |
|
— |
|
366 236 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
366 236 |
| Reversal of impairment of investment in associate |
|
— |
|
962 531 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
962 531 |
| Cost and share of reserves at the end of the year |
|
— |
|
— |
|
64 821 |
|
58 731 |
|
33 512 |
|
24 454 |
|
98 333 |
|
83 185 |
| Loans to associates and joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans at the beginning of the year |
|
2 110 982 |
|
— |
|
9 282 |
|
4 067 |
|
34 783 |
|
44 536 |
|
2 155 047 |
|
48 603 |
| Loans advanced to associates and joint ventures1 |
|
701 682 |
|
2 442 744 |
|
13 399 |
|
5 915 |
|
51 369 |
|
60 085 |
|
766 450 |
|
2 508 744 |
| Loans repaid by associates and joint ventures |
|
(332 387) |
|
(212 004) |
|
(5 318) |
|
— |
|
(48 719) |
|
(63 552) |
|
(386 424) |
|
(275 556) |
| Loans waived |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(4 000) |
|
— |
|
(4 000) |
| Expected credit loss |
|
(121 212) |
|
(55 258) |
|
197 |
|
(700) |
|
(1 039) |
|
(2 286) |
|
(122 054) |
|
(58 244) |
| Loss on modification of financial instrument |
|
— |
|
(64 500) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(64 500) |
| Loans at the end of the year |
|
2 359 065 |
|
2 110 982 |
|
17 560 |
|
9 282 |
|
36 394 |
|
34 783 |
|
2 413 019 |
|
2 155 047 |
| Closing net book value |
|
2 359 065 |
|
2 110 982 |
|
82 381 |
|
68 013 |
|
69 906 |
|
59 237 |
|
2 511 352 |
|
2 238 232 |
| Share of (losses)/profits from associates and joint ventures |
|
— |
|
(1 328 767) |
|
6 358 |
|
3 550 |
|
9 058 |
|
(4 530) |
|
15 416 |
|
(1 329 747) |
| * |
The Group also has interests in a number of individually immaterial associates and joint ventures that are accounted for using the
equity method which are aggregated under “other associates” and “other joint ventures”. |
| 1 |
Loans advanced to associates and joint ventures also includes the interest accrued on existing loans. |
|
