3.6 Financial liabilities
 

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Refer to accounting policies on borrowings and trade and other payables for financial liabilities (which exclude employee-related liabilities and VAT), and share capital for equity instruments issued by the Group.

3.6.1 Trade and other payables
 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within the normal operating cycle of the business. If not, they are presented as non-current liabilities.

2020
R'000
  2019
R'000
 
Trade payables 3 611 013   3 719 714  
Accruals 206 771   181 406  
Employee benefits 35 604   79 594  
Sundry creditors 228 781   148 945  
Deferred revenue 19 484   8 003  
Contingent consideration   1 923  
VAT 21 007   10 864  
Payables to related parties (refer to note 8) 488 983   1 220 937  
4 611 643   5 371 386  
3.6.2 Borrowings
 

Borrowings are recognised initially at fair value, net of transaction costs incurred, when the relevant contracts are entered into. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method.

Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after year-end.

2020 
R'000 
  2019 
R'000 
 
Interest-bearing borrowings 2 305 209    3 200 408   
Non-interest-bearing borrowings 13 952    35 876   
2 319 161    3 236 284   
Less: Amounts included in current portion of borrowings (2 316 383)   (1 520 764)  
2 778    1 715 520   

The table below details the facilities drawn upon at 31 May 2020. For terms of these facilities, refer to note 3.2.

Facility utilised  
Facility Investec   Rand
Merchant
Bank
  2020
R'000
  2019
R'000
 
Senior facility A 50%   50%   266 677   858 735  
Senior facility B 50%   50%   39 102   400 196  
Mezzanine facility 100%     410 532   410 532  
Facility A 100%     1 509 038   1 512 428  
Facility B 100%     77 082    
2 302 431   3 181 891  

The Group did not default on any loans or breach any terms of the underlying agreements during the period.

Changes in liabilities arising from financing activities

Borrowings 
due within 
one year 
R'000 
  Borrowings 
due after 
one year 
R'000 
  Total 
R'000 
 
Closing balance – 31 May 2018 1 456 968    1 514 140    2 971 108   
Acquisition of subsidiaries net of balance due to BLT elimination on consolidation 104 529    —    104 529   
Elimination of inter-group loan acquired (98 846)   —    (98 846)  
Non-interest-bearing borrowings raised 35 876    —    35 876   
Non-interest-bearing borrowings repaid (170)   —    (170)  
Interest-bearing borrowings repaid (769 652)   —    (769 652)  
Interest-bearing borrowings raised 792 059    201 380    993 439   
Closing balance – 31 May 2019 1 520 764    1 715 520    3 236 284   
Disposal of subsidiaries (54 539)   —    (54 539)  
Transfer of inter-group loan to external borrowings as part of disposal group 53 154    —    53 154   
Derecognition of loan claim —    (13 465)   (13 465)  
Non-interest-bearing borrowings raised 170    —    170   
Non-interest-bearing borrowings repaid (22 094)   —    (22 094)  
Transfer from non-current to current interest-bearing borrowings 1 669 464    (1 669 464)   —   
Interest-bearing borrowings repaid (881 931)   (29 905)   (911 836)  
Interest-bearing borrowings raised 31 395    92    31 487   
Closing balance – 31 May 2020 2 316 383    2 778    2 319 161   
3.6.3 Financial guarantee contracts
 

Financial guarantee contracts are recognised at fair value on the date that the Group becomes a party to an irrevocable commitment. Financial guarantee contracts are subsequently stated at the higher of the amount determined by the expected credit loss (ECL) model and the amount initially recognised. Any difference between the redemption value guarantee obligation and the amount paid is recognised in the income statement.

A portion of the financial guarantee contract obligation to RBL Bank was called upon in the current period.

2020
R'000
  2019
R'000
 
Opening balance 243 492    
Adjustment on the initial application of IFRS 9   19 029  
Foreign exchange movement 10 166    
Additional liability raised during the year through profit or loss – continuing operations 671   62 132  
Additional liability raised during the year through investment in joint venture – continuing operations   40 631  
Acquisition of subsidiaries   125 000  
Used during the year (44 190)    
Amounts released through profit or loss – continuing operations (8 500)   (3 300)  
Amounts released through profit or loss – discontinued operations (165)    
Closing carrying amount 201 474   243 492  

Included in the closing balance is a parent guarantee of USD5 million to the value of R87.6 million (2019: R73.4 million) which has been issued in favour of RBL Bank on behalf of Oxigen Services India Private Limited. Should this guarantee be called upon, the Group will be required to settle the amount within seven days.

During the financial year, a cash-backed guarantee of USD3 million to the value of R44.2 million was called upon by RBL Bank and settled. An amount of R48.2 million was provided for in respect of this guarantee in the prior year.

An amount of R113.2 million (2019: R121.7 million) is owed to Investec Limited by Glocell Proprietary Limited, and has been guaranteed by Glocell Distribution Proprietary Limited should the former not be able to meet its obligations.

The Group has not raised a liability for its guarantee to the consortium of financial institutions in respect of Cell Cís funding of R959 million (2019: R1.25 billion) due to the fact that it holds sufficient collateral, which the Group expects to realise should the guarantee be called upon and the residual financial risk not be material. Refer to note 2.1.