Financial instruments are recognised on the group’s balance sheet when the group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus any directly attributable transaction costs when the group becomes a party to the contractual arrangements. Subsequent to initial recognition, these instruments are measured in accordance with their classification.

The group’s objective in using financial instruments is to reduce the uncertainty over future cash flows arising principally as a result of commodity price, currency and interest rate fluctuations. Where significant finance is taken out, this is approved at board meetings.

The foreign exchange contracts outstanding at year end are marked-to-market at the prevailing closing spot rate.

The group finances its operations through a combination of retained surpluses, bank borrowings and long-term loans.

The group borrows short-term funds with fixed or floating rates of interest through a subsidiary company, Tiger Consumer Brands Limited.

The main risks arising from the group’s financial instruments are, in order of priority, procurement risk, foreign currency risk, interest rate risk, liquidity risk and credit risk as detailed in the following notes.

33.1

Categorisation of assets and liabilities

Refer to the accounting policies for further details on the above classifications.

* Includes owed by subsidiaries

Refer to the accounting policies for further details on the above classifications.

33.2

Procurement risk (commodity price risk)

Commodity price risk arises from the group being subject to raw material price fluctuations caused by supply conditions, weather, economic conditions and other factors. The strategic raw materials acquired by the group include wheat, maize, rice, oats and sorghum.

The group uses commodity futures and options contracts or other derivative instruments to reduce the volatility of commodity input prices of strategic raw materials. These derivative contracts are only taken out to match an underlying physical requirement for the raw material. The group does not write naked derivative contracts.

The group has developed a comprehensive risk management process to facilitate, control and to monitor these risks. The procurement of raw materials takes place in terms of specific mandates given by the executive management. Position statements are prepared on a monthly basis and these are monitored by management and compared to the mandates.

The board has approved and monitors this risk management process, inclusive of documented treasury policies, counterparty limits, controlling and reporting structures.

The accounting policy regarding foreign exchange hedging transactions was changed effective 1 October 2023. Hedge accounting is no longer adopted and has been amended to the recognition of fair value whereby forex gains and losses are recognised in profit or loss.

Commodity price sensitivity is not applicable to the company.

33.3

Foreign currency risk

As the group operates in various countries and undertakes transactions denominated in foreign currencies, exposures to foreign currency fluctuations arise. The group does not hold foreign exchange contracts in respect of foreign borrowings, as its intention is to repay these from its foreign income stream or subsequent divestment of its interest in the operation. Foreign exchange differences relating to investments, net of their related borrowings, are reported as translation differences in the group's net other comprehensive income until the disposal of the net investment, at which time exchange differences are recycled through profit or loss.

Exchange rate exposures and associated foreign exchange risks are managed within approved policy and strategy parameters. The portfolio approach includes a combination of forward contracts, derivative structures and spot hedges with varying hedge ratios which are influenced by the duration and market outlook. The foreign exchange risk is managed dynamically by Group Treasury with the assistance of external consultants who provide financial services and execution capacity.

The accounting policy for foreign exchange hedging transactions changed in October 2023 from hedge accounting to the recognition of fair value whereby foreign exchange gains or losses are recognised in profit or loss.

The exposure and concentration of foreign currency risk is included in the table below.

* Other includes the Australian dollar, Canadian dollar, Japanese yen, Swiss franc, New Zealand dollar, Pound sterling and Euro

The following spot rates were used to translate financial instruments denominated in foreign currency:

* Synthetic forward option

The terms of the forward currency contracts have been negotiated to match the terms of the commitments within regulatory constraints.

Timing of cash flows relating to foreign currency is as follows:

These are expected to affect the income statement in the following year.

These are expected to affect the income statement in the following year.

During the year R1,2 million (2023: R1,3 million) was released from other comprehensive income and included in the carrying amount of the non-financial asset or liability (highly probable forecast transactions).

Foreign currency sensitivity

The following table details the group and company’s sensitivity to a 10% change in the ZAR rates against the respective foreign currencies. Strengthening is reflected as +10% and weakening reflected as -10%.

The sensitivity analysis includes only material outstanding foreign currency denominated monetary items as detailed in the table below and adjusts their translation at the reporting date for a 10% change in foreign currency exchange rates. A positive number indicates an increase in profit or loss and other comprehensive income where the ZAR weakens against the relevant currency. Hedge accounting ceased in 2024. The 2023 values reflect the effectiveness assessment and hedge accounting results.

Forex currency sensitivity on associates

The following table details the group’s sensitivity to a 5% weakening/strengthening in the ZAR against the Chilean peso, a 5% weakening/strengthening in the ZAR against the US dollar.

33.4

Interest rate risk management

Interest rate risk results from the cash flow and financial performance uncertainty arising from interest rate fluctuations.

Financial assets and liabilities affected by interest rate fluctuations include bank and cash deposits as well as bank borrowings. At the reporting date, the group cash deposits were accessible immediately or had maturity dates up to six months. The interest rates earned on these deposits closely approximate the market rates prevailing.

Interest rate sensitivity

The sensitivity analysis addresses only the floating interest rate exposure emanating from the net cash position. The interest rate exposure has been calculated with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period.

If interest rates had increased/(decreased) by 1% and all other variables were held constant, the profit for the year ended would decrease/(increase) as detailed in the table below due to the use of the variable interest rates applicable to the long-term borrowings and short-term borrowings. The fixed interest rate on the borrowings would not affect the financial performance. Any gain or loss would be unrealised and consequently the notional impact is not presented.

33.5

Liquidity risk management

Liquidity risk arises from the seasonal fluctuations in short-term borrowing positions. A material and sustained shortfall in cash flows could undermine investor confidence and restrict the group's ability to raise funds.

The group manages its liquidity risk by monitoring weekly cash flows and ensuring that adequate cash is available or borrowing facilities maintained. In terms of the memorandum of incorporation, the group's borrowing powers are unlimited.

The group's liquidity exposure is represented by the aggregate balance of financial liabilities as indicated in the categorisation table in note 33.1.

Contractual maturity for non-derivative financial liabilities

The following tables detail the group's and company's remaining contractual maturity for non-derivative financial liabilities.

The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group and company will be required to pay. The table includes both interest and principal cash flows. The "finance charge" column represents the possible future cash flows attributable to the instrument included in the maturity analysis, which are not included in the carrying amount of the financial liability.

Net trade and other payables are generally settled between 30 to 45 days and as such most of the balance reflected below in the zero to six months category will be zero to two months.

33.6

Credit risk management

GROUP

Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously. The group limits its counterparty exposure arising from financial instruments by only dealing with well-established institutions of high credit standing. The group does not expect any counterparties to fail to meet their obligations given their high credit ratings.

Credit risk in respect of the group's customer base is controlled by the application of credit limits and credit monitoring procedures. Certain significant receivables are monitored on a daily basis. Where appropriate, credit guarantee insurance is obtained.

The group's credit exposure, in respect of its customer base, is represented by the net aggregate balance of amounts receivable. Concentrations of credit risk are disclosed in note 21.

COMPANY

Credit risk exposure at 30 September 2024 relating to guarantees amounted to R15,3 million (2023: R15,3 million). Refer to note 32.

33.7

Capital management

The primary objective of the company and group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The company and group manages its capital structure, calculated as equity plus net debt, and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the company and group may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or increase or decrease levels of debt. No changes were made in the objectives, policies or processes during the years ended 30 September 2024 and 30 September 2023.

33.8

Fair value hierarchy

Financial instruments are normally held by the group until they close out in the normal course of business. The fair values of the group's financial instruments, which principally comprise put, call and futures positions with SAFEX, forward exchange contracts and JSE listed investments, approximate their carrying values. The maturity profile of these financial instruments fall due within 12 months.

There are no significant differences between carrying values and fair values of financial assets and liabilities.

Trade and other receivables, amounts owed by subsidiaries, investments and loans and trade and other payables carried on the statement of financial position approximate the fair values.

Long-term borrowings and short-term borrowings are measured at amortised cost using the effective interest rate method and the carrying amounts approximate their fair value.

The group used the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted prices in active markets for identical assets or liabilities

Level 2: Inputs other than quoted prices that are observable for the asset or liability (directly or indirectly)

Level 3: Inputs for the asset or liability that are unobservable

As at 30 September, the group held the following financial instruments measured at fair value:

Reconciliation of level 3 fair value measurements