Notes to the financial statements | Note 4.5

Summary of material accounting policies

Supplier finance arrangements (SFAs)

SFAs with no extended payment terms

The Group participates in SFAs. This allow suppliers that decide to participate to trade invoices and receive the funding earlier than the invoice due date from the participating funder. The Group pays the participating funder on behalf of the supplier that traded the invoice, based on the original contractual supplier payment terms, and has no further obligation to the participating funder. The financial liability subject to this arrangement is classified as trade and other payables.

The assessment of SFAs, and whether they result in changes to the trade payable classification, takes into consideration numerous factors. These include the impact of the arrangement on the supplier's payment terms, the nature of the relationships between the Group and the funders, changes in cash flows, whether any guarantees are provided by the Group to the funders, as well as whether the supplier has discharged the Group from its obligation.

Considering the above assessment at reporting date, the Group had invoices subject to the SFAs that met the requirements to remain classified as trade payables.

The arrangement that remained classified as trade payables does not have an impact on the Group's trade payables, net debt and cash flows. Cash paid to these suppliers is recognised as part of cash paid to suppliers and employees in the operating activities in the cash flow statement. Refer to note 7.1.5 for the liquidity risk disclosure.

Trade and other payables and accruals are obligations to pay for goods and services that have been acquired in the ordinary course of business. Accruals and other payables mainly represent licence fees and amounts payable for goods received, net of VAT obligations.

The Group's standard payment terms of trade payables is within 90 days after the date of receipt of the invoice.

R1 532 million (31 March 2024: R1 435 million) of the total trade payables is subject to supplier financing where the suppliers have decided to receive the invoice amounts before the due date from independent external funders (refer to note 7.1.5 for details). Trade and other payables increased mainly as a result of a surge in operational activity in March due to higher sales volumes.