CHAPTER 12:
Funding

12.1 DEBT

12.1.1Accounting policies relating to net financing costs and interest-bearing borrowings

Borrowing costs, finance income and other financing expenses

Fees paid on the establishment of loan facilities are capitalised to the loan as transaction costs to the extent that it is directly related to the establishment of the loan facility. This fee is deferred until the draw down occurs upon which it is amortised over the loan term using the effective interest rate method. To the extent that it is not probable that some or all of the facility will be drawn down (ie revolving credit facility), the fee is capitalised as a prepayment and amortised over the period of the facility to which it relates.

General and specific borrowing costs directly attributable to the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Interest income is recognised as it accrues in profit or loss, using the effective interest rate method.

Fees and commission

Fees and commission income and expenses that are integral to the effective interest rate on a financial asset or financial liability are included in the measurement of the effective interest rate. Other fees and commission expenses relate mainly to transaction and service fees and are expensed as the services are rendered.

Loans and borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.

12.1.2Net financing costs

		Group		Company
For the year ended 31 December	Note	2021 Rm	2020 Rm	2021 Rm	(Restated)¹ 2020 Rm
Finance income		239	215	157	113
Interest income relating to:		240	217	157	113
– Financial assets at amortised cost		24	28	7
– Cash and cash equivalents		195	172	150	113
– Financial assets at FVPL		4	4
– Non-financial assets		9	5
– Finance leases		8	8
Reimbursement of interest income on environmental rehabilitation funds		(4)	(5)
Commitment fee income		3	3
Finance costs		(860)	(1 047)	(2 198)	(2 054)
Interest expense relating to:		(798)	(1 038)	(2 182)	(2 042)
– Interest-bearing borrowings		(725)	(936)	(383)	(645)
– Financial liabilities at amortised cost		(7)
– Bank overdrafts		(1)	(41)	(1)	(41)
– Non-financial liabilities		(12)	(7)
– Indebtedness by subsidiaries	17.3.2			(1 752)	(1 308)
– Lease liabilities	11.4	(53)	(54)	(46)	(48)
Net fair value losses on interest rate swaps designated as cash flow hedges: recycled from OCI		(146)	(107)
– Realised fair value loss		(201)	(153)
– Unrealised fair value gain		55	46
Unwinding of discount rate on rehabilitation costs	13.3	(242)	(305)	(3)	(3)
Recovery of unwinding of discount rate on rehabilitation costs		32	38
Amortisation of transaction costs		(13)	(9)	(13)	(9)
Borrowing costs capitalised²	10.1.3	307	374

Total net financing costs		(621)	(832)	(2 041)	(1 941)
¹Refer note 19.2.
²Borrowing costs capitalisation rate:		6.14%	7.79%

12.1.3 Interest-bearing borrowings

	Group		Company
At 31 December	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Non-current¹	9 255	7 448	4 704	2 748
Loan facility²	4 061	1 748	4 061	1 748
Project financing³	4 551	4 700
Bonds	643	1 000	643	1 000
Current⁴	1 000	6 163	851	6 053
Loan facility²	491	6 050	491	6 050
Project financing³	149	110
Bonds	360	3	360	3

Total interest-bearing borrowings	10 255	13 611	5 555	8 801
Summary by interest-bearing borrowings by period of redemption:
Less than six months	694	107	629	55
Six to 12 months	306	6 056	222	5 998
Between one and two years	652	1 379	445	1 230
Between two and three years	1 361	1 082	1 089	875
Between three and four years	795	915	446	643
Between four and five years	3 172	349	2 724
Over five years	3 275	3 723
Total interest-bearing borrowings	10 255	13 611	5 555	8 801
¹The non-current portion represents:	9 255	7 448	4 704	2 748
– Capital	9 269	7 450	4 718	2 750
– Reduced by the amortisation of transaction costs	(14)	(2)	(14)	(2)
²The loan facility was refinanced during April 2021 which resulted in the extinguishment of the previous loan facility and recognition of the refinanced loan facility.
³Interest-bearing borrowings relating to the Cennergi group.
⁴The current portion represents:	1 000	6 163	851	6 053
– Capital	955	6 109	807	6 000
– Interest capitalised	51	60	50	59
– Reduced by the amortisation of transaction costs	(6)	(6)	(6)	(6)
	Group		Company
At 31 December	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Overdraft
Bank overdraft	1	17	1	17

The bank overdraft is repayable on demand and interest is based on current South African money market rates.

12.1.4 Salient terms and conditions of interest-bearing borrowings

Below is a summary of the salient terms and conditions of the facilities:

		Refinanced loan facility
	Year	Bullet term loan	Amortised term loan	Revolving credit facility
Aggregate nominal amount (Rm)	2021	2 500	2 025	3 250
Issue date or draw down date		26 April 2021	26 April 2021	26 April 2021
Maturity date		26 April 2026	26 April 2026	26 April 2026
Capital payments		The total outstanding amount is payable on final maturity date	Repay each loan in fullin equal consecutive semi-annual instalments on the last business day of April and October of each year	The total outstanding amount is payable on final maturity date
Duration (months)		60	60	60
Secured or unsecured		Unsecured	Unsecured	Unsecured
Undrawn portion (Rm)	2021	nil	nil	3 250
Interest
Interest payment basis		Floating rate	Floating rate	Floating rate
Interest payment period		Three months	Three months	Monthly
Interest rate		3-month JIBAR plus a margin of 240 basis points (2.40%)	3-month JIBAR plus a margin of 230 basis points (2.30%)	1-month JIBAR plus a margin of 265 basis points (2.65%)
Effective interest rates for the transaction costs	2021	0.11%	0.17%	N/A

There were no defaults or breaches in terms of the refinanced loan facility during the reporting period.

The following financial covenants in terms of the refinanced loan facility, must be complied with:

Ratio of consolidated net debt¹ to equity of the group for any measurement period shall be less than 0.8:1
Ratio of consolidated EBITDA (excluding Cennergi and the project finance companies) to net interest expense of the group for any measurement period shall not be less than 4:1
Ratio of consolidated net debt¹ to consolidated EBITDA (including dividends received from equity-accounted investments) of the group for any measurement period shall be less than 3:1

¹	For purposes of financial covenants, net debt is adjusted for project financing, pending litigation and other claims as well as other financial guarantees (refer note 13.4).

The group has complied with all the above mentioned contractually agreed financial covenants as illustrated below:

At 31 December	2021
Net (cash)/debt: equity (%)
– Target	<80
– Actual	(1)
EBITDA: interest cover (times)
– Target	>4
– Actual	35
Net debt: EBITDA (times)
– Target	<3
– Actual	0

		Project financing
	Year	Tsitsikamma SPV loan facility	Amakhala SPV loan facilities¹	Amakhala SPV loan facilities²
Remaining nominal amount outstanding (Rm)	2021	1 870	2 686	145
	2020	1 918	2 734	158
Debt assumed date		1 April 2020	1 April 2020	1 April 2020
Maturity date		31 December 2030	30 June 2031	30 June 2031
Capital payments		Bi-annual installments ranging incrementally over the term from 0.18% to 10.65% ofthe nominal amount	Bi-annual installments ranging incrementally over the term from 0.18% to 10.65% ofthe nominal amount	Bi-annual installments ranging incrementally over the term from 0.18% to 10.65% ofthe nominal amount
Duration (months)		129	135	135
Secured or unsecured³		Secured	Secured	Secured
Undrawn portion (Rm)	2021	121	273	nil
	2020	122	273	nil
Interest
Interest payment basis		Floating rate⁴	Floating rate⁴	Fixed rate⁵
Interest payment period		Bi-annual	Bi-annual	Bi-annual
Interest rate:
– Base rate		3-month JIBAR	3-month JIBAR	1) 8% until June 2021 2) 9.46% from July 2021 to 30 June 2026 3) Thereafter 3-month JIBAR
– Margin/all in margin range	2021	266 basis points (2.66%)	361 to 681 basis points (3.61% to 6.81%)	360 to 670 basis points (3.60% to 6.70%)
	2020	264 basis points (2.64%)	359 to 681 basis points (3.59% to 6.81%)	371 to 681 basis points (3.71% to 6.81%)

	2021	2020
¹Comprising the following loan facilities at the specified all in margin:
– Senior A and C	+3.61	+3.59
– Senior IFC	+3.71	+3.71
– Subordinate A and C	+6.71	+6.69
– Subordinate IFC	+6.81	+6.81
These margins are subject to variation.
²Comprising the following loan facilities at the specified all in margin:
– Senior B	+3.60	+3.71
– Subordinate B	+6.70	+6.81
³Security held over the assets and share capital of Tsitsikamma SPV and Amakhala SPV respectively.
⁴Interest payments are hedged from a floating rate to a fixed rate. Refer note 16.3.3.2.4.2.
⁵The facility will become a floating rate facility from 30 June 2026.

There were no defaults or breaches in terms of the project financing during the reporting periods.

The project financing is subject to the following financial covenants which have been achieved for both 2021 and 2020:

Tsitsikamma SPV loan facility

Historic debt service cover ratio¹ for the calculation period ending on a calculation date is not less than 1.10:1
Minimum annual forecast debt service cover ratio for the next calculation period is not less than 1.10:1
Loan life cover ratio² is not less than 1.15:1
Project life cover ratio³ is not less than 1.25:1

¹	The ratio of A to B where, A is the aggregate cash flow available for debt service (CFADS) less taxes and B is the aggregate of the finance costs, in each case for the relevant calculation period.
²	The ratio of A to B where, A is the net present value of forecast CFADS from such calculation date to (and including) the final scheduled repayment date, discounted at the discount rate (as produced by the financial model) and B is the aggregate of the facility outstanding on such calculation date.
³	The ratio of A to B where, A is the net present value of forecast CFADS from such calculation date to the end of the tenor of the PPA discounted at the discount rate and B is the aggregate of facility outstanding as at such calculation date.

Amakhala SPV loan facilities

Projected senior debt service cover ratio¹ for the immediately following measurement period is not less than 1.10: 1
Historic senior debt service cover ratio¹ for the immediately preceding measurement period is not less than 1.10: 1
Senior loan life cover ratio², as at each measurement date, is not less than 1.15: 1
Senior project life cover ratio², as at each measurement date, is not less than 1.30: 1
Projected total debt service cover ratio³ for the immediately following measurement period is not less than 1.05: 1
Historic total debt service cover ratio³ for the immediately preceding measurement period is not less than 1.05: 1
Total loan life cover ratio⁴, as at each measurement date, is not less than 1.10: 1
Total project life cover ratio⁴, as at each measurement date, is not less than 1.20: 1

¹	The ratio of CFADS to senior debt service for that period.
²	The ratio of the applicable total present value amount, as at that measurement date to the sum of (i) the senior facility outstanding and (ii) all the IFC facility outstanding, as calculated and produced by the financial model, as part of the forecast for that measurement date.
³	The ratio of CFADS to total senior debt service for that period.
⁴	The ratio of the applicable total present value amount, as at that measurement date to total facility outstanding, as calculated and produced by the financial model, as part of the forecast for that measurement date.

		DMTN Programme (bonds)
	Year	R357 million senior unsecured floating rate note	R643 million senior unsecured floating rate note
Aggregate nominal amount (Rm)	2021	357	643
	2020	357	643
Issue date or draw down date		13 June 2019	13 June 2019
Maturity date		13 June 2022	13 June 2024
Capital payments		No fixed or determined payments, thetotal outstanding amount is payable onfinal maturity date	No fixed or determined payments, thetotal outstanding amount is payable onfinal maturity date
Duration (months)		36	60
Secured or unsecured		Unsecured	Unsecured
Interest
Interest payment basis		Floating rate	Floating rate
Interest payment period		Three months	Three months
Interest rate		3-month JIBAR plus a margin of165 basis points (1.65%)	3-month JIBAR plus a margin of189 basis points (1.89%)

12.1.5 Net debt

	Group
	2021 Rm	2020 Rm
Net debt is presented by the following items on the statement of financial position:
Non-current interest-bearing debt	(9 725)	(7 954)
Interest-bearing borrowings	(9 255)	(7 448)
Lease liabilities	(470)	(493)
Lease liabilities classified as non-current liabilities held-for-sale		(13)
Current interest-bearing debt	(1 034)	(6 200)
Interest-bearing borrowings	(1 000)	(6 163)
Lease liabilities	(34)	(29)
Lease liabilities classified as non-current liabilities held-for-sale		(8)
Net cash and cash equivalents	7 041	3 187
Cash and cash equivalents	7 042	3 196
Cash and cash equivalents classified as non-current assets held-for-sale		8
Overdraft	(1)	(17)

Total net debt	(3 718)	(10 967)

Analysis of movement in net debt:

	Group
		Liabilities arising from financing activities
	Cash and cash equivalents/ (overdraft) Rm	Non-current interest-bearing debt Rm	Current interest-bearing debt Rm	Total Rm
Net debt at 31 December 2019	1 719	(7 452)	(77)	(5 810)
Cash flows	1 468	(1 750)	120	(162)
Operating activities	5 493			5 493
Investing activities	(1 556)			(1 556)
Financing activities	(2 469)	(1 750)	120	(4 099)
– Interest-bearing borrowings raised	1 750	(1 750)
– Interest-bearing borrowings repaid	(88)		88
– NCI option exercised	115			115
– Distributions to NCI share option holders	(1)			(1)
– Loan from NCI	69			69
– Lease liabilities paid	(32)		32
– Dividends paid to owners of the parent	(3 034)			(3 034)
– Shares acquired in the market to settle share-based payments	(270)			(270)
– Dividend paid to NCI BEE Parties	(978)			(978)

Non-cash movements		1 248	(6 243)	(4 995)
Amortisation of transaction costs			(9)	(9)
Interest accrued			114	114
Lease remeasurements and modifications		(7)		(7)
New leases		(24)		(24)
Acquisition of subsidiaries		(4 847)	(222)	(5 069)
– Leases		(48)	(7)	(55)
– Project financing		(4 799)	(215)	(5 014)
Transfers between non-current and current liabilities		6 126	(6 126)


Net debt at 31 December 2020	3 187	(7 954)	(6 200)	(10 967)
Cash flows	3 819	(2 750)	6 137	7 206
Operating activities	8 432			8 432
Investing activities	13 419			13 419
Financing activities	(18 032)	(2 750)	6 137	(14 645)
– Interest-bearing borrowings raised	4 725	(4 725)
– Interest-bearing borrowings repaid	(8 076)	1 975	6 101
– Distributions to NCI share option holders	(7)			(7)
– Dividends paid to NCI of Tsitsikamma SPV	(5)			(5)
– Loan from NCI	(69)			(69)
– Lease liabilities paid	(36)		36
– Dividends paid to owners of the parent	(9 557)			(9 557)
– Shares acquired in the market to settle share-based payments	(382)			(382)
– Shares repurchased and transaction expenses	(1 506)			(1 506)
– Dividend paid to NCI BEE Parties	(3 119)			(3 119)

Non-cash movements		979	(971)	8
Amortisation of transaction costs		(3)	(10)	(13)
Interest accrued			19	19
Lease remeasurements and modifications		(12)		(12)
Disposal of lease liabilities classified as held-for-sale		7	8	15
New leases		(1)		(1)
Transfers between non-current and current liabilities		988	(988)
Translation difference on movement in cash and cash equivalents	35			35
Net debt at 31 December 2021	7 041	(9 725)	(1 034)	(3 718)

	Company
	2021 Rm	2020 Rm
Net debt is presented by the following items on the statement of financial position:
Non-current interest-bearing debt	(5 112)	(3 180)
Interest-bearing borrowings	(4 704)	(2 748)
Lease liabilities	(408)	(432)
Current interest-bearing debt	(880)	(6 076)
Interest-bearing borrowings	(851)	(6 053)
Lease liabilities	(30)	(23)
Net cash and cash equivalents	4 867	1 847
Cash and cash equivalents	4 868	1 864
Overdraft	(1)	(17)

Total net debt	(1 125)	(7 409)

	Company
		Liabilities arising from financing activities
	Cash and cash equivalents/ (overdraft) Rm	Non-current interest-bearing debt Rm	Current interest-bearing debt Rm	Total Rm
Net debt at 31 December 2019	673	(7 439)	(67)	(6 833)
Cash flows	1 174	(1 750)	17	(559)
Operating activities¹	5 315			5 315
Investing activities¹	(1 363)			(1 363)
Financing activities	(2 778)	(1 750)	17	(4 511)
– Interest-bearing borrowings raised	1 750	(1 750)
– Lease liabilities paid	(17)		17
– Dividends paid	(4 337)			(4 337)
– Shares acquired in the market to settle share-based payments	(174)			(174)

Non-cash movements		6 009	(6 026)	(17)
Amortisation of transaction costs			(9)	(9)
Lease remeasurements		(7)		(7)
Transfers between non-current and current liabilities		6 017	(6 017)
Other		(1)		(1)

Net debt at 31 December 2020 (Restated¹)	1 847	(3 180)	(6 076)	(7 409)
Cash flows	3 020	(2 750)	6 024	6 294
Operating activities	14 417			14 417
Investing activities	7 342			7 342
Financing activities	(18 739)	(2 750)	6 024	(15 465)
– Interest-bearing borrowings raised	4 725	(4 725)
– Interest-bearing borrowings repaid	(7 975)	1 975	6 000
– Lease liabilities paid	(24)		24
– Dividends paid	(13 721)			(13 721)
– Shares repurchased and transaction expenses	(1 506)			(1 506)
– Shares acquired in the market to settle share-based payments	(238)			(238)

Non-cash movements		818	(828)	(10)
Amortisation of transaction costs		(3)	(10)	(13)
Lease remeasurements		(7)		(7)
Transfers between non-current and current liabilities		827	(827)
Other		1		1

Net debt at 31 December 2021	4 867	(5 112)	(880)	(1 125)

¹	Refer note 19.2.

12.1.6 Notes to the statements of cash flows relating to net financing costs paid

			Group		Company
For the year ended 31 December		Note	2021 Rm	2020 Rm	2021 Rm	Restated¹ 2020 Rm
Interest received¹			217	192	150	113
Finance income¹		12.1.2	239	215	157	113
Non-cash flow items
– Interest income accrued not yet received			(18)	(20)	(7)
– Reimbursement of interest income on environmental rehabilitation fund		12.1.2	4	5
– Finance lease interest income adjustment		12.1.2	(8)	(8)
Interest paid			(1 017)	(1 305)	(2 191)	(2 042)
Finance costs		12.1.2	(860)	(1 047)	(2 198)	(2 054)
Non-cash flow items
– Unwinding of discount rate on rehabilitation costs		13.3	242	305	3	3
– Recovery of unwinding of discount rate on rehabilitation costs			(32)	(38)
– Amortisation of transaction costs		12.1.2	13	9	13	9
– Borrowing costs capitalised		12.1.2	(307)	(374)
– Unrealised fair value gain on interest rate swaps designated as cash flow hedges: transfer
	from OCI	12.1.2	(55)	(46)
– Finance costs capitalised to loans less finance costs paid and interest accrued not yet paid			(18)	(114)	(9)

Net financing costs paid			(800)	(1 113)	(2 041)	(1 929)

¹	Refer note 19.2.

12.1.7 Financial liabilities composition

		Group		Company
At 31 December	Note	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Non-current
Derivative financial liabilities designated as hedging instruments		406	713
– Cash flow hedge derivatives: interest rate swaps¹		406	713
Financial liabilities at amortised cost			69
– Loans from NCI²			69

Total non-current financial liabilities	16.3	406	782
Current
Financial liabilities at FVPL			49
– Derivative financial liabilities³			49
Financial liabilities at amortised cost				9 746	16 071
– Non-interest-bearing loans from subsidiaries⁴	17.5			76	8 672
– Treasury facilities with subsidiaries⁵	17.5			9 670	7 399

Total current financial liabilities			49	9 746	16 071
Total financial liabilities	16.3	406	831	9 746	16 071

¹	Refer note 16.3.3.2.4.2.
²	Loan payable to a BEE minority shareholder of Tsitsikamma SPV. The loan bears interest at a fixed rate of 16.3%, is unsecured and has no fixed terms of repayment, but is subject to cash being available and covenants approvals from the project financiers. The loan was settled in March 2021.
³	Relates to commodity FECs.
⁴	Loans granted by subsidiary companies which are interest free, unsecured and repayable on demand.
⁵	Treasury facilities with subsidiary companies have no repayments terms and are repayable on demand. Interest is charged at money market rates.

12.1.8 Other liabilities composition

	Group		Company
At 31 December	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Non-current
Income received in advance	26	27
Total non-current other liabilities	26	27
Current
Termination benefits	82	205	36	63
Leave pay	241	225	34	31
Bonuses	481	271	139	79
VAT	26	31	14	18
Royalties	73
Carbon tax	2	5
Current tax payables	418	34	7
Other	89	90	12	16
Total current other liabilities	1 412	861	242	207
Total other liabilities	1 438	888	242	207

CHAPTER 12: Funding

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CHAPTER 12:
Funding