Notes
1. Basis of preparation and changes to the group’s accounting policies
The preparation of these results has been supervised by Noel Doyle, Chief Financial Officer of Tiger Brands Limited.
The condensed consolidated interim results for the six months ended 31 March 2018 have been prepared in accordance with IAS 34: Interim Financial Reporting as issued by the IASB, 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.
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 2017. Revenue is recorded in terms of IFRS 15. The majority of the group’s financial instruments measured at fair value in terms of IFRS 13, are noted as level 1 hierarchy, which are valued based on quoted market prices.
Goodwill and indefinite useful life intangible assets are tested for impairment annually (as at 30 September) and when circumstances arise 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 were disclosed in the annual consolidated financial statements for the year ended 30 September 2017.
There will be a reclassification of financial assets and the measurement of provisions against receivables will be revised using the expected credit loss method, the impact of which is being quantified and an impact assessment will be completed by 30 September 2018. The effective date will be 1 October 2018 and the modified retrospective method will be used.
2. Operating income before impairments and abnormal items
| R’million | Unaudited six months ended 31 March 2018 |
Unaudited six months ended 31 March 2017 |
Audited year ended 30 September 2017 |
|---|---|---|---|
| Depreciation (included in cost of sales and other operating expenses) | (294,3) | (280,5) | (552,5) |
| Amortisation | (5,5) | (6,1) | (11,4) |
| IFRS 2 (included in other operating expenses) | |||
| – Equity settled | (37,9) | (42,7) | (97,7) |
| – Cash settled | (5,4) | (11,3) | (12,6) |
3. Impairment
| R’million | Unaudited six months ended 31 March 2018 |
Unaudited six months ended 31 March 2017 |
Audited year ended 30 September 2017 |
|---|---|---|---|
| During the current period, R19,3 million relating to Hercules indefinite useful life intangible assets and R10,4 million plant and equipment were impaired. | |||
| Impairment of intangible assets | (19,3) | – | (309,9) |
| Impairment of property, plant and equipment | (10,4) | – | – |
| Impairment of associate investment | – | – | (250,0) |
| (29,7) | – | (559,9) |
4. Abnormal items
| R’million | Unaudited six months ended 31 March 2018 |
Unaudited six months ended 31 March 2017 |
Audited year ended 30 September 2017 |
|---|---|---|---|
| Net costs associated with VAMP product recall* | (415,2) | – | – |
| Initial insurance claim | 50,0 | 85,7 | 85,7 |
| Profit on disposal of property | 2,3 | – | 73,0 |
| Proceeds from warranty claim settlement | – | 28,4 | 28,4 |
| Once-off consulting fees | – | (91,5) | (132,0) |
| Restructuring provision | – | – | (78,5) |
| (362,9) | 22,6 | (23,4) |
| * | These costs exclude ongoing trading losses and are calculated on the assumption that the VAMP facilities are likely to have reopened by 30 September 2018. The testing of the frozen pork raw materials stock is ongoing and only expected to be concluded within the next three months. All frozen stock tested to date has proved negative for Listeria monocytogenes. The remaining carrying value of frozen stock exposed to potential future write-offs is R80 million. All other stock of product, raw materials, packaging and ingredients, which is expected to be utilised following a recommencement of operations amounts to R103 million at 31 March 2018. |
5. Reconciliation between profit for the period and headline earnings
| R’million | Unaudited six months ended 31 March 2018 |
Unaudited six months ended 31 March 2017 |
Audited year ended 30 September 2017 |
|---|---|---|---|
| Continuing operations | |||
| Profit for the year attributable to owners of the parent | 1 395,6 | 1 686,4 | 3 011,0 |
| Loss/(profit) on disposal of plant, equipment and vehicles | 0,5 | – | (52,5) |
| Impairment of intangible assets | 19,3 | – | 309,9 |
| Impairment of property, plant and equipment | 8,5 | – | – |
| Impairment of associate investment | – | – | 250,0 |
| Headline earnings adjustment – associates | |||
| – Profit on sale of non-current assets | (1,2) | (0,1) | (8,5) |
| Headline earnings for the period | 1 422,7 | 1 686,3 | 3 509,9 |
| Tax effect of headline earnings | 2,3 | – | 15,5 |
| Attributable to non-controlling interest | – | – | – |
| Discontinued operations | |||
| Profit for the year attributable to owners of the parent | 10,9 | 0,2 | 108,3 |
| Profit on disposal of subsidiary | (7,5) | – | (98,1) |
| Profit on sale of property, plant and equipment | – | (0,4) | – |
| Headline earnings for the period | 3,4 | 0,2 | 10,2 |
| Tax effect of headline earnings | – | 0,2 | – |
| Attributable to non-controlling interest | – | (0,3) | – |
6. Analysis of profit/(loss) from discontinued operations
| R’million | Unaudited six months ended 31 March 2018 |
Unaudited six months ended 31 March 2017 |
Audited year ended 30 September 2017 |
|---|---|---|---|
| Profit/(loss) for the period from discontinued operations (attributable to owners of the company) | |||
| Revenue | 42,9 | 387,1 | 561,2 |
| Expenses | (31,9) | (387,3) | (547,2) |
| Operating income/(loss) before impairments and abnormal items | 11,0 | (0,2) | 14,0 |
| Impairments | – | – | – |
| Abnormal items | 7,5 | (1,2) | 97,9 |
| Operating income/(loss) after impairments and abnormal items | 18,5 | (1,4) | 111,9 |
| Finance costs | (0,4) | (0,3) | (0,2) |
| Profit/(loss) before taxation | 18,1 | (1,7) | 111,7 |
| Taxation | (3,9) | 0,6 | (6,7) |
| Profit/(loss) for the period from discontinued operations | 14,2 | (1,1) | 105,0 |
| Attributable to non-controlling interest | (3,3) | 1,3 | 3,3 |
| Attributable to owners of parent | 10,9 | 0,2 | 108,3 |
| Cash flows from discontinued operations | |||
| Net cash inflows from operating activities | 7,7 | 68,3 | 138,6 |
| Net cash (outflows)/inflows from investing activities | (13,2) | (12,7) | 1,4 |
| Net cash inflows/(outflows) from financing activities | 5,8 | (3,6) | (80,8) |
| Net cash inflows | 0,3 | 52,0 | 59,2 |
7. Net finance costs and investment income
| R’million | Unaudited six months ended 31 March 2018 |
Unaudited six months ended 31 March 2017 |
Audited year ended 30 September 2017 |
|---|---|---|---|
| Net interest paid | (29,2) | (110,4) | (179,7) |
| Net foreign exchange loss | (17,5) | (9,9) | (30,2) |
| Investment income | 2,1 | 2,0 | 3,3 |
| Net financing costs | (44,6) | (118,3) | (206,6) |
8. Subsequent events
With the exception of the Enterprise product recall and related Listeria update reflected on page 3, there are no other material events that occurred during the period subsequent to 31 March 2018, but prior to these financial results being authorised for issue.