Tiger Brands | Annual Financial Statements 2023 - Guarantees and contingent liabilities

GUARANTEES AND CONTINGENT LIABILITIES

	GROUP
(R’million)	2023	2022
Guarantees (unutilised)	35,3	35,3

Cross guarantees exist amongst the company and the subsidiaries of the group relating to the banking facilities.

Guarantees exist against the company for the obligations of certain subsidiaries amounting to R15,3 million at 30 September 2023 (2022: R3,5 million).

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. Contingent assets are not recognised as assets, but are disclosed. There were no contingent assets identified during the current year (2022: none).

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. Alternatively, it may be a present obligation that arises from past events but is not recognised because an outflow of economic benefits to settle the obligation is not probable, or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised as liabilities unless they are acquired as part of a business combination, but are disclosed.

Contingent liabilities

The class action against the company arising from the outbreak of listeriosis was certified by the High Court (Gauteng Local Division, Johannesburg) on 3 December 2018. Summons was issued against Tiger Brands on 16 April 2019. The company filed its plea on 8 August 2019.

Pursuant to subpoenas issued on behalf of the company, in June 2020, the High Court ruled in favour of the company, compelling various third parties, including the National Institute for Communicable Diseases (NICD), the South African Bureau of Standards (SABS), two accredited national laboratories, and select meat producers to provide epidemiological information required for the class action lawsuit.

All of the third parties (except the SABS) who appealed the High Court ruling in September 2020 were granted leave to appeal to the Supreme Court of Appeal (SCA). The appeal was heard on 5 November 2021. On 4 February 2022, the SCA handed down its judgment in which it overturned the earlier ruling of the High Court, thus reversing the order compelling the third parties to provide epidemiological information required for the class action lawsuit.

Since the decision of the SCA, the parties have continued with pre-trial preparations, including discovery in terms of the Rules of Court, in order to get the matter ready for trial.

As previously confirmed, the company has product liability insurance cover appropriate for a group of its size. Coverage is subject to the terms and limits of the policy. Our insurers have advised that the product liability policy does not include cover for exemplary, punitive damages should such an award be made by the court, and hence, should such an award be made (or for constitutional damages), the product liability policy will not cover that portion of the award that relates to damages that are not compensatory in nature. The company has reserved its rights in this regard.