Financial instruments by category

Disclosure of trade debtors

Movement in the loss allowance for trade and other receivables are as follows:

The Group applies the IFRS 9 simplified approach to measuring ECL which uses a lifetime expected loss allowance for all the trade receivables.

To measure the ECL, trade receivables have been grouped based on the shared credit risk characteristics and the days past due.

The expected loss rates are based on the payment profiles of sales over a period of 36 months before 30 June 2020 and the corresponding historical credit losses experienced within this period. The historical loss rate has been adjusted to reflect current and forward looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identified the GDP rate, inflation rate and average prime lending rate to be the most relevant forward looking factors.

The Group has assessed the impact of the COVID-19 on expected further payments and deemed the impact to be immaterial for the following reasons:

• The Group's debtors have been historically good payers with minimal provisions and write-offs experienced;
• The Group entities' largest customers are medical aid schemes and payment is made within agreed payment period; and
• The Group entities have continued operating under the respective lockdown regulation, contracts with customers have not been affected and contractual conditions have been met with no impact.

All receivables are current. The carrying amounts of all trade and other receivables approximate fair value due to the short- term nature of the receivables, hence the impact of discounting is immaterial.

The ratings for Nedbank Limited, FNB Limited and Standard Bank Limited were obtained from Moody's.

The ratings for Sasfin Limited and Bank Windhoek Limited were obtained from Global Credit Rating Company.

The rating for Sanlam Limited was obtained from Standard & Poor's.

The rating scores are based on the following broad investment grade definitions:

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

Movement in borrowings are as follows:

Compliance with loan covenants

During the prior period, Nedbank issued a revolving loan facility totalling R900 million (of which R386 million has been utilised) to the Group of which amounts shall be applied to funding the working capital and general corporate requirements of the Group. The rate of interest on the loan for each interest period is the percentage rate per annum which is the aggregate of the applicable margin and Johannesburg Inter-bank Average Rate (JIBAR).

The financial condition to the Nedbank facility is for the Group to ensure that net debt to EBITDA in respect of any relevant period shall not exceed 2.5:1 times and interest cover in respect of any relevant period shall not be less than 4:1 (refer to Note 3 (v)).

Movement in lease liability are as follows:

Loans to/(from) group company comprise the following balances:

Financial assets at FVTPL

In the current year the Company and Group disinvested, resulting in no investments being held at year-end. In the prior financial year the Company and Group had funds in the following investments, namely:

• STANLIB Extra Income Fund;
• NedGroup Core Income Fund;
• Coronation Strategic Income fund; and
• Prescient Income Property Fund.

Investment in AAR Insurance Kenya was reclassified from available for sale to financial assets at FVTPL upon adoption of IFRS 9 on 1 July 2018.

On adoption of IFRS 9 on 1 July 2018, there were no related fair value gains to transfer from the available-for-sale financial assets reserve to retained earnings.