6. FINANCIAL INSTRUMENTS

Substantially all financial instruments at fair value through profit and loss are classified as level 3 instruments in the fair value hierarchy. Movements in the instruments are as follows:

	Surety loan receivable Unaudited R'000	SPV5 derivative liability Unaudited R'000	Class B Preference shares Unaudited R'000	Escrow receivable Unaudited R'000	Total Unaudited R'000
Opening balance as at 1 June 2024	131 870	(11 238)	(46 483)	25 063	99 212
Additions	—	—	—	11 598	11 598
Fair value (loss)/gain recognised in profit or loss	(757)	3 857	(6 651)	—	(3 551)
Closing balance as at 30 November 2024	131 113	(7 381)	(53 134)	36 661	107 259
Financial assets at fair value through profit or loss – included in current assets	21 852	—	—	18 077	39 929
Financial assets at fair value through profit or loss – included in non-current assets	109 261	—	—	18 584	127 845
Financial liabilities at fair value through profit or loss – included in current liabilities	—	(7 381)	—	—	(7 381)
Financial liabilities at fair value through profit or loss – included in non-current liabilities	—	—	(53 134)	—	(53 134)
	131 113	(7 381)	(53 134)	36 661	107 259
Unrealised (loss)/gain	(757)	3 857	(6 651)	—	(3 551)

Surety loans receivable
Surety 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 is 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). In February 2024 the payment terms for the surety loans were renegotiated, with the payments being agreed as instalments payable annually commencing on 30 September 2025 and ending on 30 September 2030.

Binding agreement to acquire Cell C claim from Gramercy
On 11 November 2024, TPC and Gramercy concluded a binding term sheet in terms of which TPC agrees to acquire a certain Claim of ZAR463,6 million (including accrued interest), which Gramercy has against Cell C, for a purchase consideration of ZAR450 million. The Claim bears interest at 10% per annum and is required to be settled by no later than 31 March 2026. The purchase price is payable in four non-interest-bearing instalments of ZAR112,5 million each upon Closing Date, by 30 November 2025, by 31 March 2026, and by 30 November 2026. The Closing Date is the 5th business day after the last of the conditions precedent has been fulfilled or waived. By 30 November 2024 not all the conditions precedent (which are outside TPC’s control) were fulfilled. Nevertheless, the binding purchase agreement creates a forward purchase obligation subject to certain conditions, which meets the definition of a derivative. The derivative was assessed as having an insignificant fair value.

Escrow receivable
In November 2024, a financial institution entered into an agreement with CEC, whereby CEC agreed to sell and transfer receivables (all rights, title and interest with respect to the remaining handset fee payable by a subscriber, except where indicated otherwise, under a subscriber agreement) to the financial institution (Book sale Four). The purchase price paid at the date of sale is equal to 90% of the present value of expected contractual cash flows due over the remainder of the subscription term.

CEC agreed that the financial institution may transfer back to CEC, at the end of four months, specified non-performing advances referred to as the holdback receivable. Based on the nature of the contractually specified advances, it is virtually certain at the transaction date that CEC will retain ownership of these advances to customers, and therefore at the transaction date, it was determined that CEC retained the risks and rewards associated of ownership relating to the specified advances. Contractually, the advances subject to the holdback arrangement is capped at maximum of 10% of the present value of the expected cash flows of the book sold to the financial institution.

This transaction also resulted in CEC obtaining a new financial asset, referred to as the Escrow receivable for which a risk margin is held in an Escrow account. CEC has a contractual right to the remaining balance in the Escrow account at the end of a specified period. The Escrow receivable was recognised at fair value, is measured at fair value through profit or loss and is included in financial assets at fair value through profit or loss.

Included in the current portion of advances to customers is R4.6 million relating to the hold back on the book sales that have not been derecognised.

A finance cost of R37.3 million in respect of Book sale Four is included in finance costs.

Fair value

The value of the Escrow receivable fluctuates based on the collections experience of advances over the subscription period. The escrow account will be utilised as follows:

Any amounts not collected from subscribers in respect of sold debtors when due will be drawn by the financial institution from the escrow account;
On the maturity date of the subscription agreements in respect of the sold receivables, any remaining amount in the escrow account will be released back to CEC.

The fair value of the Escrow receivable was determined through the discounting of post churn cash flows after taking into account the credit risk of the books sold. Since the actual cash flow performance is in line with the expected cash flows no fair value adjustment was required. Any gains or losses arising from changes in fair value will be included in profit or loss.

Critical accounting estimates and assumptions
Management has conducted an assessment of the retained credit risk following the transfer of customer advances related to Book sale Four concluded in November 2024. After comparing the retained credit risk before and after the transfer, and evaluating it against management's internal threshold for retained credit risk, it was determined that for Book sale Four the transaction resulted in the derecognition of the book as the transfer qualifies for derecognition, except for a contractually specified portion of the book, referred to as the holdback debtor, for which CEC retained the risks and rewards associated of ownership.

Transferred financial assets related to Book sale Four

	Gross carrying amount R'000	Credit loss allowance R'000	Amortised cost/fair value R'000
Not derecognised
Advances to customers*	4 578	(990)	3 588
Financial asset recognised
Escrow receivable at fair value through profit or loss	11 598	—	11 598
	16 176	(990)	15 186

*	This relates to the hold back receivable amount.

Book sale Five consisted of fully written-off advances to customers; therefore, the proceeds are considered a recovery of bad debts.

	Net carrying amount R'000	Proceeds R'000
Book sale Four	343 876	278 431
Book sale Five	—	6 870
	343 876	285 301