3. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
3.1 Credit risk
 

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 table below. The carrying amounts of financial assets represent the maximum credit exposure. This exposure is considered, without taking into account any collateral and financial guarantees, to be as follows:

2020 
R’000 
  2019 
R’000 
 
Financial assets
Trade and other receivables 3 475 089   3 812 824  
Cash and cash equivalents 2 014 917   1 385 596  
Loans to associates and joint ventures 9 488   26 260  
Loans receivable 72 120   147 526  
Advances to customers 1 682 075   1 617 097  
7 253 689   6 989 303  

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 Baa3 or better, or cash on hand. ECL of 0%;

Group 2: Fully performing with a Moody's rating of Baa3 or better;

Group 3: Fully performing with a Moody's rating of between Ba1 and Caa2; and

Group 4: Counterparties who are considered to be in default and those that have a Moody's rating of Caa3 or lower.

2020 
R’000 
  2019 
R’000 
 
Counterparties with external credit rating
Group 1 2 014 917   1 385 596  
Group 2    
Group 3    
Group 4    
Total 2 014 917   1 385 596  

The table below discloses the credit quality of the financial assets (excluding trade receivables) of the Group for which no external credit ratings are available. Equivalent credit ratings were based on the latest Moody's default ratings. Management defines default as when counterparties miss payments and future payments are either suspended or unlikely. Management writes off debtors where they have actively pursued the debt and there is no indication of recovery.

The counterparties were categorised as follows:

Group 1: Fully performing counterparties who are highly collateralised, with no external credit ratings. ECL range of 0% to 4.24% (2019: 0% to 0.75%);

Group 2: Fully performing counterparties, with a credit rating equivalent to a Moody's rating of B1 or better. ECL range of 4.24% to 5.92% (2019: 0.75% to 3.3%);

Group 3: Fully performing counterparties, with a credit rating equivalent to a Moody's rating of between B2 and Caa2. ECL range of 5.92% to 52.6% (2019: 3.3% to 15.49%); and

Group 4: Counterparties who are considered to be in default and have an equivalent Moody's rating of Ca or lower. ECL of 52.6% to 100% (2019: 15.49% to 100%).

2020 
R’000 
  2019 
R’000 
 
Counterparties without external credit rating
Group 1 1 682 075   1 617 097  
Group 2 71 495   102 350  
Group 3 9 544   71 075  
Group 4 569   361  
Total 1 763 683   1 790 883  

The Group's maximum credit risk exposure is the carrying amount of all financial assets on the statement of financial position and sureties provided with the maximum amount the Group could have to pay if the sureties are called on, amounting to R200.8 million (2019: R268.6 million). A financial guarantee contract liability, included in the maximum credit risk exposure above, of R201.5 million (2019: R243.5 million) has been raised in the Group's statement of financial position at year-end. Refer to note 3.6.3.

Impact of COVID-19

The impact of COVID-19 on the ECLs recognised in the current financial year has been considered across all financial assets exposed to counterparty credit risk. COVID-19 has resulted in the Group experiencing a general increase in allowances raised for ECLs of approximately 9%. 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. COVID-19 overlays were determined for each impacted financial asset utilising a data-driven approach with the relevant information sourced from Moody's Analytics.

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% 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.

The advent of COVID-19 has had a fundamental impact on the economy in general with an exaggerated impact on credit risk. Moody's Analytics updated its forecasts to reflect this risk by taking into account the possible spread of the epidemic through the country, the economic impact of the epidemic including measures taken to prevent its spread and measures taken by government to ameliorate the economic impact. It recommends continuing to apply the Baseline, S1 and S3 GCorr scenarios weighted 40%, 30% and 30% (these scenarios have been adjusted to reflect the change in risk). We have calculated the 2020 financial year ECL scenarios based on a GCorr weighting of 10%, 20% and 70%. This scenario represents a significant bias towards a downside view by the higher weighting to S3, and thus the Group considers this to sufficiently have integrated the impact of COVID-19 into the ECLs calculated. The Baseline forecast reflects a contraction of more than 8% in GDP between the fourth quarter of 2019 and the third quarter of 2020, with the S3 GCorr weighting further amplifying this contraction.

(i) 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. A large portion of the Group's revenues are generated in South Africa, with other operations in India as well as Mexico. There are no other significant geographical concentrations of credit risk. 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. Allowances for impairment are raised in accordance with Group policy which has been revised to be in line with the requirements of IFRS 9. 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, major retailers, independent and informal retail customers, petroleum forecourts, municipalities, private utilities and cellular networks. The balance of the customer base is widely dispersed.

(ii) 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 credit risk with Investec Bank Limited in line with its treasury function. Investec Bank Limited has a credit rating of Baa3 based on the latest Moody's local currency long-term issuer default ratings.

(iii) Loans to associates and joint ventures

The Group has provided loans to associates and joint ventures of the Group to satisfy operational and other requirements. These associates and joint ventures are located in South Africa, India and Mauritius. 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. Allowances for impairment are raised in accordance with the general model in IFRS 9 to which Group policy has been aligned. Refer to note 2.1.

The loss allowance as at 31 May 2020 for loans to associates and joint ventures is determined as follows:

Gross
R’000
  Impairment
R’000
  Net
R’000
  Average
ECL/
impairment
ratio
%
 
31 May 2020
Loans advanced to counterparties without external ratings included in:
Group 3 11 053   (1 565)   9 488   (14.16)  
Group 4 310 381   (310 381)     (100.00)  
321 434   (311 946)   9 488  
31 May 2019
Loans advanced to counterparties without external ratings included in:
Group 2 26 450   (190)   26 260   (0.72)  
Group 4 268 892   (268 892)     (100.00)  
295 342   (269 082)   26 260  

 

(iv) Loans receivable

The Group has provided loans to third parties who are seen as product distributors in order to expand our distribution channels. These loans have been extended on various terms depending on managementís 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. Allowances for impairment are raised in accordance with the general model in IFRS 9 to which Group policy has been aligned.

The loss allowance as at 31 May 2020 for loans receivable is determined as follows:

Gross
R’000
  Impairment 
R’000 
  Net 
R’000 
  Average 
ECL/ 
impairment 
ratio 
 
31 May 2020
Loans advanced to counterparties without external ratings included in:
Group 2 74 700   (3 205)   71 495    (4.29)  
Group 3 60   (4)   56    (6.67)  
Group 4 16 312   (15 743)   569    (96.51)
91 072 (18 952) 72 120 
31 May 2019
Loans advanced to counterparties without external ratings included in:
Group 2 77 223 (1 134) 76 089  (1.47)
Group 3 73 577   (2 503)   71 074    (3.40)  
Group 4 2 733   (2 370)   363    (86.72)  
153 533   (6 007)   147 526   

(v) Advances to customers

Advances to customers represent the activities of the Group's subsidiary, Comm Equipment Company Proprietary Limited, which provides financing for cellular handsets and other devices. This customer base is widely dispersed throughout South Africa and no significant concentrations of credit risk have been noted. The business model of this financing arrangement indirectly exposes the Group to the credit risk of Cell C Proprietary Limited. However, management believes it has effectively mitigated this risk through the operational model utilised as well as the very high collateral requirements contractually in place, as detailed below:

  • the Group has stringent requirements for the granting of credit to these customers;
  • the Group has direct access to the customer cash flows received by Cell C in respect of the handsets and devices financed;
  • the Group has direct access to the customer cash flows received by Cell C in respect of the customer subscriptions; and
  • in the unlikely event of default, the Group has the right to sell the customer base.

The Group calculates an ECL on this portfolio in accordance with the general model in IFRS 9 to which Group policy has been aligned. In light of the significant collateral arrangements in place, the ECL on this portfolio is not significant and well within the Group's tolerances. Refer to note 3.5.3.

The loss allowance as at 31 May 2020 for advances to customers is determined as follows:

Gross
R’000
  Impairment 
R’000 
  Net 
R’000 
  Average 
ECL/ 
impairment 
ratio 
 
31 May 2020
Advances to customers without external ratings included in:
Group 1 1 687 564   (5 489)   1 682 075    (0.33)  
1 687 564   (5 489)   1 682 075     
31 May 2019      
Advances to customers without external ratings included in:
Group 1 1 619 965 (2 868) 1 617 097  (0.18)
1 619 965 (2 868) 1 617 097 

Expected credit losses

The Group has the following financial assets subject to the expected credit loss model:

  • trade and other receivables;
  • cash and cash equivalents;
  • loans to associates and joint ventures;
  • loans receivable; and
  • advances to customers.

Included in loans to associates and joint ventures, as well as loans receivable, are amounts receivable to which the Group has applied the general impairment model. The Group has considered the financial performance, external debt and future cash flows of the related parties and based on these, determined the credit risk relating to these receivables. The general impairment model has been applied to advances to customers. The Group applies the simplified approach using a provision matrix to determine the ECL for trade and other receivables. This results in calculating lifetime ECLs for trade and other receivables.

Provision matrix

ECLs are calculated by applying a loss ratio to the aged balance of trade 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. Trade 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, 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 historic loss ratio is then adjusted for forward looking information to determine the ECL for the portfolio of trade receivables at the reporting period to the extent that there is a strong correlation between the forward looking information and the ECL. In the prior year, in most instances no material adjustments were made due to the inclusion of forward looking information as the majority of trade receivables are settled within a relatively short period (under 60 days on average). In the current year, forward looking adjustments were made predominately as a result of the impact of COVID-19 among other factors. Refer to the "Impact of COVID-19" noted above.

The Group used 48 to 60 monthsí 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 managementís best estimate including information obtained from an external ratings agency (Moodyís). 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, except for the impact of COVID-19, as noted above.

Management considers trade receivables aged in excess of 90 days 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 Groupís 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 circumstance 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 Groupís 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 situationís 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 2020 for trade receivables and other receivables to which the provision matrix has been applied is determined as follows:

Ageing and impairment analysis

  Gross 
Rí000
 
  Impairment 
Rí000
 
  Net 
Rí000
 
  Average 
ECL/ 
impairment 
ratio 
%
 
 
31 May 2020                 
Fully performing receivables                 
Trade receivables arising on revenue from contracts with customers                 
Banks  230 622    (314)   230 308    (0.14)  
Independent and informal retail customers  935 615    (3 737)   931 878    (0.40)  
Formal market retail customers  371 560    (3 803)   367 757    (1.02)  
Customers in the petroleum sector  87 155    (159)   86 996    (0.18)  
Receivables for starter packs  19 074    (311)   18 763    (1.63)  
Cell C  1 728    (14)   1 714    (0.81)  
Other cellular networks  44 152    (20)   44 132    (0.05)  
Municipalities and private utilities  62 874    —    62 874    —   
Associates, joint ventures and related parties  485    —    485    —   
Trade receivables arising on financing transactions                 
Cell C  1 253 602    (2 673)   1 250 929    (0.21)  
Other  15 417    (432)   14 985    (2.80)  
Sundry receivables  212 279    (1 473)   210 806    (0.69)  
Past due receivables                 
Trade receivables arising on revenue from contracts with customers                 
Banks                 
Past due by 1 to 30 days  —    —    —    —   
Past due by 31 to 60 days  —    —    —    —   
Past due by 61 to 90 days  283    (2)   281    (0.71)  
Past due by more than 90 days  519    (519)   —    (100.00)  
Independents and informal retail customers                 
Past due by 1 to 30 days  12 247    (858)   11 389    (7.01)  
Past due by 31 to 60 days  4 873    (843)   4 030    (17.30)  
Past due by 61 to 90 days  4 403    (656)   3 747    (14.90)  
Past due by more than 90 days  53 573    (38 956)   14 617    (72.72)  
Formal market retail customers                 
Past due by 1 to 30 days  3 633    (4)   3 629    (0.11)  
Past due by 31 to 60 days  3 508    (16)   3 492    (0.46)  
Past due by 61 to 90 days  1 681    (21)   1 660    (1.25)  
Past due by more than 90 days  65 960    (65 960)   —    (100.00)  
Customers in the petroleum sector                 
Past due by 1 to 30 days  256    (4)   252    (1.56)  
Past due by 31 to 60 days  611    (15)   596    (2.45)  
Past due by 61 to 90 days  987    (29)   958    (2.94)  
Past due by more than 90 days  5 266    (5 266)   —    (100.00)  
Receivables for starter packs                 
Past due by 1 to 30 days  86 787    (1 207)   85 580    (1.39)  
Past due by 31 to 60 days  53 896    (796)   53 100    (1.48)  
Past due by 61 to 90 days  11    (9)     (81.82)  
Past due by more than 90 days  237    (237)   —    (100.00)  
Cell C                 
Past due by 1 to 30 days  3 307    (60)   3 247    (1.81)  
Past due by 31 to 60 days  904    (27)   877    (2.99)  
Past due by 61 to 90 days  5 218    (205)   5 013    (3.93)  
Past due by more than 90 days  2 140    (2 140)   —    (100.00)  
Other cellular networks                 
Past due by 1 to 30 days  2 091    (2)   2 089    (0.10)  
Past due by 31 to 60 days  1 636    (5)   1 631    (0.31)  
Past due by 61 to 90 days  97    —    97    —   
Past due by more than 90 days  30    (30)   —    (100.00)  
Municipalities and private utilities                 
Past due by 1 to 30 days  30 195    —    30 195    —   
Past due by 31 to 60 days  8 741    —    8 741    —   
Past due by 61 to 90 days  4 035    —    4 035    —   
Past due by more than 90 days  16 355    (1 899)   14 456    (11.61)  
Associates, joint ventures and related parties                 
Past due by 1 to 30 days  —    —    —    —   
Past due by 31 to 60 days  —    —    —    —   
Past due by 61 to 90 days  —    —    —    —   
Past due by more than 90 days  —    —    —    —   
  3 608 043    (132 702)   3 475 341    (3.68)  
                 
31 May 2019                 
Fully performing receivables                 
Trade receivables arising on revenue from contracts with customers                 
Banks  71 899    (2)   71 897    —   
Independent and informal retail customers  733 768    (2 445)   731 323    (0.33)  
Formal market retail customers  403 736    (9 476)   394 260    (2.35)  
Customers in the petroleum sector  59 977    (3)   59 974    (0.01)  
Receivables for starter packs  130 604    (233)   130 371    (0.18)  
Cell C  26 199    (292)   25 907    (1.11)  
Other cellular networks  95 935    (27)   95 908    (0.03)  
Municipalities and private utilities  64 696    —    64 696    —   
Associates, joint ventures and related parties  2 740    —    2 740    —   
Trade receivables arising on financing transactions                 
Cell C  1 325 303    (2 346)   1 322 957    (0.18)  
Other  214 742    (2 419)   212 323    (1.13)  
Sundry receivables  186 354    —    186 354    —   
Past due receivables                 
Trade receivables arising on revenue from contracts with customers                 
Banks                 
Past due by 1 to 30 days  3 524    (144)   3 380    (4.09)  
Past due by 31 to 60 days  4 098    (132)   3 966    (3.22)  
Past due by 61 to 90 days  1 404    (27)   1 377    (1.92)  
Past due by more than 90 days  2 555    (1 273)   1 282    (49.82)  
Independents and informal retail customers                 
Past due by 1 to 30 days  62 190    (1 277)   60 913    (2.05)  
Past due by 31 to 60 days  11 416    (1 701)   9 715    (14.90)  
Past due by 61 to 90 days  8 243    (108)   8 135    (1.31)  
Past due by more than 90 days  42 664    (41 195)   1 469    (96.56)  
Formal market retail customers                 
Past due by 1 to 30 days  92 191    (4 315)   87 876    (4.68)  
Past due by 31 to 60 days  8 445    (110)   8 335    (1.30)  
Past due by 61 to 90 days  14 324    (875)   13 449    (6.11)  
Past due by more than 90 days  17 175    (16 522)   653    (96.20)  
Customers in the petroleum sector                 
Past due by 1 to 30 days  1 982    —    1 982    —   
Past due by 31 to 60 days  305    (1)   304    (0.33)  
Past due by 61 to 90 days  380    —    380    —   
Past due by more than 90 days  5 086    (5 011)   75    (98.53)  
Receivables for starter packs                 
Past due by 1 to 30 days  81 918    (233)   81 685    (0.28)  
Past due by 31 to 60 days  98    (14)   84    (14.29)  
Past due by 61 to 90 days    (1)     (16.67)  
Past due by more than 90 days  341    (341)   —    (100.00)  
Cell C                 
Past due by 1 to 30 days  1 194    (6)   1 188    (0.50)  
Past due by 31 to 60 days  10    —    10    —   
Past due by 61 to 90 days  —    —    —    —   
Past due by more than 90 days  12    —    12    —   
Other cellular networks                 
Past due by 1 to 30 days  13 741    (2)   13 739    (0.01)  
Past due by 31 to 60 days  512    (6)   506    (1.17)  
Past due by 61 to 90 days  26    —    26    —   
Past due by more than 90 days  159    —    159    —   
Municipalities and private utilities                 
Past due by 1 to 30 days  57 460    —    57 460    —   
Past due by 31 to 60 days  37 036    —    37 036    —   
Past due by 61 to 90 days  17 819    —    17 819    —   
Past due by more than 90 days  75 550    (2 417)   73 133    (3.20)  
Associates, joint ventures and related parties                 
Past due by 1 to 30 days  620    —    620    —   
Past due by 31 to 60 days  72    —    72    —   
Past due by 61 to 90 days  —    —    —    —   
Past due by more than 90 days  30 299    (3 030)   27 269    (10.00)  
  3 908 808    (95 984)   3 812 824    (2.46)  

 

ECLs for receivables other than trade receivables have been determined using the general approach in IFRS 9. Under the general approach, an entity calculates ECLs for loans and receivables at initial recognition by considering the consequences and probabilities of possible defaults only for the next 12 months, rather than the life of the asset. It continues to apply this method until a significant increase in credit risk has occurred, at which point the loss allowance is measured based on lifetime ECLs.

The Group has applied the requirements of the general approach of IFRS 9 for counterparties where no external credit ratings are available, by way of the use of a management determined credit risk rating model. The management of the Group perform a rigorous internal rating assessment process of all external counterparty credit risk exposures and rate these exposures grouping them into the below four groups which are then aligned to equivalent Moody's sourced default ratings. Management defines default as when counterparties miss payments and future payments are either suspended or unlikely.

Group 1: Fully performing counterparties who are highly collateralised, with no external credit ratings. ECL range of 0% to 4.24% (2019: 0% to 0.75%);
Group 2: Fully performing counterparties with a credit rating equivalent to a Moody’s rating of B1 or better. ECL range of 4.24% to 5.92% (2019: 0.75% to 3.3%);
Group 3: Fully performing counterparties with a credit rating equivalent to a Moody's rating of between B2 and Caa2. ECL range of 5.92% to 52.6% (2019: 3.3% to 15.49%); and
Group 4: Counterparties who are considered to be in default and have an equivalent Moody's rating of Ca or lower. ECL of 52.6% to 100% (2019: 15.49% to 100%).

The ECLs (probability of default and loss given default) applied to these groupings are obtained from Moody's Analytics for a reference entity with similar credit risk characteristics to the counterparties to which the Group is exposed. Furthermore, management has assumed that no entity to which this rating scale is applied carries a Moody's equivalent rating in excess of investment grade, and thus the maximum rating utilised is a B1 equivalent rating. The impact of COVID-19 on this rating scale has been integrated as noted above.

Trade receivables Other financial assets
2020 
R’000 
  2019 
R’000 
  2020 
R’000 
  2019 
R’000 
 
Provision for impairment of receivables
Balance at the beginning of the year 95 984    47 908    277 954    141 850   
Amounts restated through opening retained earnings —    32 876    —    48 404   
Disposal of subsidiary (29 176)   —    (34)   —   
Allowances made during the year – continuing operations 63 430    33 215    60 307    163 645   
Allowances made during the year – discontinued operations 32 033    8 818    —    88   
Amounts utilised (31 042)   (26 833)   (369)   (76 033)  
At 31 May 131 229    95 984    337 858    277 954   
Other financial assets on which ECLs are applied include loans to associates and joint ventures, loans receivable and advances to customers. Not included in the above table are the ECLs applied within associates, and joint ventures accounted for in investments in associates and joint ventures.

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due, both under normal and stressed circumstances.

The Group's objective is to maintain prudent liquidity risk management by maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed credit lines available. Cash flow forecasting is performed in the operating entities of the Group to ensure sufficient cash to meet operational needs, while maintaining sufficient headroom to ensure that borrowing limits (where applicable) are not breached.

Surplus cash held by the operating entities over and above the balance required for working capital management is transferred to Group treasury. Group treasury invests surplus cash in interest-bearing accounts, identifying instruments with sufficient liquidity to provide adequate headroom as determined by the above mentioned forecasts.

Maturity of financial liabilities

The table below analyses the undiscounted cash flows for the Group's non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date.

Notes   Less than one month or on demand R'000   More than one month but not exceeding one year R'000   Payable in: More than one year but not exceeding two years R'000   More than two years but not exceeding five years R'000   More than five years R'000  
2020
Interest-bearing borrowings 3.6.2   5 005   2 320 703   2 778      
Non-interest-bearing borrowings 3.6.2     13 952        
Trade and other payables 3.6.1   2 598 265   1 955 394        
Lease liabilities 3.8   2 999   66 909   41 513   48 834    
Derivative liability 3.7     214 559        
Financial liability at fair value through profit or loss 3.7   357 562          
Financial guarantee contracts 3.6.3   87 603   113 871        
Bank overdraft 3.5.4   192          
Total     3 051 626   4 685 388   44 291   48 834    
2019
Interest-bearing borrowings 3.6.2   18 553   1 706 571   1 722 693   2 877    
Non-interest-bearing borrowings 3.6.2     21 924   13 952      
Trade and other payables 3.6.1   3 354 792   1 860 145     17 304    
Put option liability 3.7     158 638        
Financial liability at fair value through profit or loss 3.7     301 716        
Financial guarantee contracts 3.6.3   243 492   12 500 001        
Contingent consideration 3.6.1   1 923          
Bank overdraft 3.5.4   7 843          
Total 3 626 603   5 298 994   1 736 645   20 181    

Trade and other payables exclude non-financial instruments, being VAT and certain amounts included within accruals and sundry creditors.