Chapter 12:Funding

12.1.1 Accounting 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. These fees are 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 such as the 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.

12.1.2 Net financing income/(costs)

12.1.3 Interest-bearing borrowings

12.1.4 Salient terms and conditions of interest-bearing borrowings

1 The JIBAR interest rate will be replaced with ZARONIA on the applicable rate change date as agreed between the parties.

2 Security held over the assets and share capital of Tsitsikamma SPV, Amakhala SPV, LSP SPV and Karreebosch SPV respectively.

3 The facility will become a floating rate facility from 30 June 2026.

4 Reflects expected date to achieve COD.

Financial covenants

Loan facility

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

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

2025 loan facility

• Ratio of Consolidated EBITDA1 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 of the group for any measurement period shall be less than 3:1

2021 loan facility

• Ratio of Consolidated Net Debt1 to equity of the group for any measurement period shall be less than 0.8:1
• Ratio of Consolidated EBITDA1 (excluding project financing as well as non-cash BEE credential costs) 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 (excluding project financing and non-cash BEE credential costs, including dividends received from equity-accounted investments) of the group for any measurement period shall be less than 3:1

1 As defined in the relevant agreements.

Project financing

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

The financial covenants in terms of the project financing are the following:

Tsitsikamma SPV

• 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 ratio1 is not less than 1.15:1
• Project life cover ratio1 is not less than 1.25:1

1 As defined in the relevant agreements.

Amakhala SPV

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

1 As defined in the relevant agreements.

LSP SPV

There are no financial covenants to be reported on at 31 December 2025 and 31 December 2024 as LSP SPV is in the construction phase. Financial covenants will become effective from COD.

Karreebosch SPV

There are no financial covenants to be reported on at 31 December 2025 as Karreebosch SPV is in the construction phase. Financial covenants will become effective from COD.

12.1.5 Net cash

12.1.6 Notes to the statements of cash flows relating to net financing costs received/(paid)

12.1.7 Financial liabilities composition

1 Relates to interest rate swaps designated in a hedging relationship to hedge interest rate risk exposure resulting from interest payments on the project financing. Refer note 16.3.3.2.3.2.

2 Relates to FECs designated in a hedging relationship to hedge foreign exchange risk exposure on the purchase of foreign denominated capital purchases for the Karreebosch project funded by ZAR denominated project financing. Refer note 16.3.3.2.2.

3 Loans granted by subsidiary companies which are interest-free, unsecured and repayable on demand.

4 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