Unaudited group results and dividend declaration

For the six months ended 31 March 2024

Notes

1. BASIS OF PREPARATION AND CHANGES TO THE GROUP’S ACCOUNTING POLICIES

The preparation of these results has been supervised by Thushen Govender, chief financial officer of Tiger Brands Limited. The directors take full responsibility for the preparation of these condensed consolidated interim results.

The condensed consolidated interim results for the six months ended 31 March 2024 have been prepared in accordance with the IFRS Accounting Standards, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the South African Companies Act No. 71 of 2008 and the Listings Requirements of the JSE Limited. These statements have not been audited or reviewed by the group’s auditors.

The accounting policies adopted in the preparation of the condensed consolidated interim results are consistent with those applied in preparation of the group’s annual consolidated financial statements for the year ended 30 September 2023. There have been no assets held for sale during the period.

The going concern basis has been used in preparing these condensed consolidated interim results as the directors have a reasonable expectation that the group will continue as a going concern for the foreseeable future. The condensed consolidated interim results have been prepared on the historical cost basis, except for the measurement of certain financial instruments at fair value or amortised cost.

2. OPERATING INCOME BEFORE IMPAIRMENTS AND NON-OPERATIONAL ITEMS

(R’million) Unaudited
six months
ended
31 March
2024
Restated#
Unaudited 
six months 
ended 
31 March 
2023 
Audited
year ended
30 September
2023
Operating income has been determined after charging/(crediting)      
Depreciation (included in cost of sales and other operating expenses) 490,9 438,7 892,6
Amortisation 30,1 28,8 57,8
IFRS 2 (included in other operating expenses)      
– Equity settled 37,7 (14,2) 7,8
– Cash settled (0,4) 3,4 5,6

# Refer to note 7 for details on restatements

3. IMPAIRMENTS

Goodwill and indefinite useful life intangible assets are tested for impairment annually (as at 30 September) and when circumstances exist that indicate the carrying value may be impaired. The group’s impairment tests for goodwill and intangible assets with indefinite useful lives are based on the value-in-use calculations. The key assumptions used to determine the recoverable amount for the different cash-generating units are disclosed in the annual consolidated financial statements for the year ended 30 September 2023. The September 2023 impairment of property, plant and equipment relates mainly to the Deciduous Fruit business (LAF) of R33,0 million, as well as the Bakeries and Groceries divisions of R14,1 million and R3,2 million respectively.

Based on management’s assumptions, no impairments have been recorded at 31 March 2024.

(R’million) Unaudited
six months
ended
31 March
2024
Unaudited
six months
ended
31 March
2023
Audited
year ended
30 September
2023
Impairment of property, plant and equipment (50,9)
Fair value gain on unlisted investment through P&L 7,7
  (43,2)

4. NON-OPERATIONAL ITEMS

(R’million) Unaudited
six months
ended
31 March
2024
Unaudited
six months
ended
31 March
2023
Audited
year ended
30 September
2023
Profit on sale of trademark 127,5
Profit on disposal of land and buildings 33,0 33,0
  127,5 33,0 33,0

The profit on the sale of the trademark relates to the previously impaired Status trademark, the sale of which was concluded during the course of the current period.

5. RECONCILIATION BETWEEN PROFIT FOR THE PERIOD AND HEADLINE EARNINGS

(R’million) Unaudited
six months
ended
31 March
2024
Unaudited
six months
ended
31 March
2023
Audited
year ended
30 September
2023
Continuing operations  

Profit for the year attributable to owners of the parent  1 291,8 1 170,7 2 697,2
Profit on disposal of property, plant, equipment and vehicles  (4,0) (27,6) (21,6)
Impairment of property, plant and equipment  37,2
Profit on sale of trademark (refer note 4 (127,5)
Continuing headline earnings for the period 1 160,3 1 143,1 2 712,8
Tax effect of headline earnings  1,5 4,8 11,1
Discontinued operation  

After taxation profit for the year attributable to owners of the parent  102,2
Discontinued headline earnings for the period 102,2

6. FINANCIAL INSTRUMENTS

Fair value hierarchy

Financial instruments measured at fair value are grouped into the following levels based on the significance of the inputs used in determining fair value:

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

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

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

As at 31 March 2024, the group held the following financial instruments measured at fair value:

  Unaudited six months ended
31 March 2024
Unaudited six months ended
31 March 2023
Audited year ended
30 September 2023
(R’million) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets measured at fair value                        
Financial assets                        
Other investments 307,5 17,1 324,6 312,3 0,3 11,7 324,3 332,6 17,1 349,7
Derivatives 39,8 39,8 8,9 8,9
Liabilities                        
Derivatives (29,5) (29,5)

7. PRIOR YEAR RESTATEMENTS

As part of the group’s continued IFRS compliance evaluations and assessments, the following prior year restatements have been made:

7.1 Restatement of property, plant and equipment
7.1.1 Reclassification of software assets from property, plant and equipment to intangible assets
  In the prior period, software assets with a net book value of R146 million were capitalised to property, plant and equipment. During the current period, these assets were re-evaluated in terms of IAS 38 and reclassified from property, plant and equipment to intangible assets in line with the requirements of the standard. The prior period comparatives have been adjusted by reducing the cost by R411 million and accumulated depreciation by R265 million.
7.1.2 Reclassification of engineering spares from inventory to property, plant and equipment
  In the prior period, engineering spares with a net book value of R271 million were treated as inventory. During the current period, these assets were re-evaluated and reclassified from inventory to property, plant and equipment in compliance with IAS 16. The prior period comparatives have been adjusted by increasing the cost by R333 million and accumulated depreciation by R62 million.
7.1.3 Correction of foreign subsidiary translation differences
  In the prior period, the opening balance exchange differences relating to Chococam’s plant, vehicles and equipment were incorrectly translated resulting in a R58 million understatement of property, plant and equipment. The prior period comparatives have been corrected by increasing the cost by R80 million and accumulated depreciation by R22 million.
7.2 Restatement of goodwill and intangible assets
7.2.1 Reclassification of customer lists to goodwill
  The assessment of customer lists and goodwill has historically been reviewed in total. During the year ending September 2023, customer lists were re-evaluated in terms of IAS 38 as intangible assets with finite useful lives from initial recognition. In order to comply with IAS 36 and IAS 38, the carrying amount of the customer lists’ intangible assets was fully amortised prior to the 2021 reporting period, and therefore previous impairments to goodwill of the same cash-generating unit were reversed. The prior year comparatives have been adjusted to reflect this.
7.3 Restatement of non-distributable reserves and retained earnings
  In the prior period, equity-accounted earnings of previously disposed associates amounting to R964 million were included in the non-distributable reserve relating to the share of net earnings of associates. During the current period, this reserve was re-evaluated and reclassified to retained earnings in order to better reflect the unrealised portion of the group’s reserves arising from equity-accounted investees. The prior period comparatives have been adjusted by reducing the non-distributable reserve relating to the share of net earnings of associates and increasing the retained earnings. This is a transfer between equity reserves.
                   2023
(R’million) Notes Previously
reported
Effect of
change
Restated
Statement of financial position        
Property, plant and equipment 7.1 5 720,1 183,0 5 903,1
Goodwill 7.2 1 184,0 466,1 1 650,1
Intangible assets 7.11/7.2 1 723,1 (319,8) 1 403,3
Current assets   13 250,4 (270,9) 12 979,5
Inventories 7.1.2 7 614,9 (270,9) 7 344,0
Total assets   25 900,5 58,4 25 958,9
Issued capital and reserves   16 458,6 58,4 16 517,0
Non-distributable reserves 7.1.3/7.3 4 145,6 (905,7) 3 239,9
Accumulated profits 7.3 13 774,5 964,1 14 738,6
Total equity   16 635,3 58,4 16 693,7
Total equity and liabilities   25 900,5 58,4 25 958,9
Statement of cash flows        
Working capital changes   (263,8) 28,0 (235,8)
Purchase of property, plant and equipment   (448,4) (28,0) (476,4)
Depreciation   462,5 (23,8) 438,7
Amortisation   4,1 24,7 28,8
 

8. CHANGE IN ACCOUNTING ESTIMATES

During the current financial period, management reassessed the methodology and historical judgements applied to the accounting treatment of specific accruals. The revised approach refines the accounting of these estimates during the course of the financial year. The nature of the change in estimate resulted from current developments within the business and changes to the measurement techniques previously adopted, predominantly relating to customer accruals. This change in accounting estimate impacted operating profit for the period under review by R169 million.

The above change in accounting estimates has been applied prospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

9. ANALYSIS OF PROFIT FROM DISCONTINUED OPERATION

Profit for the period from discontinued operation (attributable to owners of the company)

Discontinued operations in the current year relate to the Value-added Meat Products (VAMP), a division of Tiger Consumer Brands Limited disposed during the course of 2020.

On 20 March 2024, the company reached a settlement agreement with the company’s insurers for the sum of R140,0 million for obsolete stock previously written off in 2018.

(R’million) Unaudited
six months
ended
31 March
2024
Unaudited
six months
ended
31 March
2023
Audited
year ended
30 September
2023
Sundry income 140,0
Profit before taxation 140,0
Taxation (37,8)
Profit for the period from discontinued operation 102,2

10. SUBSEQUENT EVENTS

There are no material events that occurred during the period subsequent to 31 March 2024 and prior to these financial results being authorised for issue.