Basis of presentation of the condensed interim consolidated financial statements

The condensed interim consolidated financial statements have been prepared in accordance with the JSE Limited Listings Requirements for interim reports, and the requirement of the Companies Act of South Africa applicable for condensed interim consolidated financial statements. The Listings Requirements require interim reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, and include disclosure as required by IAS 34 Interim Financial Reporting and the Companies Act of South Africa. The accounting policies applied in the preparation of the condensed interim consolidated financial statements from which the condensed interim consolidated financial statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements.

In preparing these interim condensed consolidated financial statements, management has made judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these judgements, estimates and assumptions.

Preparation and results

These half year ended December 31  2023 results have not been audited or reviewed by the group's auditors. The condensed interim consolidated financial statements have been prepared by SG Larkin FCCA, under the supervision of DE Cleasby CA(SA), and were approved by the board of directors on February 20  2024.

Accounting estimates, judgements and fair values

During the period, the expected credit loss (ECL) provision increased from 5,9% (June 30  2023) to 6,1% at December 31  2023. The ECL percentage remains elevated compared to 2019 (pre-COVID-19 ECL percentage of 4,5%) as we operate in times of economic uncertainty and heightened cash flow pressures on independent free trade customers, and particularly a more difficult macro-economic environment. It is possible that estimates and actual uncollectible amounts will differ, and additional charges may be required; however, it is also possible that reductions in the groups' ECL provision could also occur over time.

As at December 31  2023 the provision for stock obsolescence is 2,4% of gross inventory (H1F2023: 2,2%).

The group has applied judgement to recognise subsequent measurement changes in the puttable NCI liabilities in accordance with the principles of IFRS 10.23. Changes in assumptions used to estimate the future purchase price of the puttable NCI liabilities are recorded directly in retained earnings in the statement of changes in equity. There is diversity in practice as to whether to recognise subsequent measurement changes in the carrying amount in profit or loss or equity. There was no remeasurement changes of the puttable NCI liabilities during the period (H1F2023: R13,4 million (credit)).

Hyperinflationary accounting requires transactions and balances of each reporting period to be presented in terms of the measuring unit current at the end of the reporting period to account for the effect of loss of purchasing power during the period. The group has applied the Turkish consumer price index (CPI) (as determined by TURKSTAT) as the general price index to restate amounts as it provides an official observable indication of the change in the price of goods and services. From July 1  2020, the cumulative CPI at December 31  2023 is 142,4 (June 30  2023: 109,4), which has been used to restate amounts. CPI provides an official observable indication of the change in the price of goods and services. Hyperinflation accounting for Türkiye resulted in the group recording a net monetary loss of R2,2 million (H1F2023: R10,0 million loss).

Significant commitments

The group's policy is to maintain a strong capital base to sustain future development of the businesses so that it can continue to provide benefits to its stakeholders. During H1F2024, R2,9 billion of the R5,1 billion F2024 approved capital investment has been spent mainly on infrastructure (through upgrades to (or new) distribution centres including the fit out of plant and equipment, purchase of land and vehicle fleet). For H2F2024, significant capital commitments will involve:

• Australia – continued infrastructure investment to grow capacity in Yatala, Toowoomba, Hervey Bay, Malaga and Darwin.
• United Kingdom – infrastructure investment in new Manchester distribution centre and continued vehicle fleet replacement.
• New Zealand – continued infrastructure investment in distribution centres in Taupo (expected opening May 2024), Kerikeri and Wellington.
• South Africa – continued infrastructure investment into new facility in Alberton (expected completion April 2024).
• Portugal – infrastructure investment in Lisbon distribution centre to grow capacity.
• Southeast Asia – infrastructure investment in Malaysia.

Related parties

The group has a related party relationship with its subsidiaries and associates. Key management personnel has been defined as the executive and non-executive directors of the company. The definition of key management includes the close members of family of key management personnel and any other entity over which key management exercise control.

The group encourages its employees to purchase food products from group companies. These transactions are generally conducted on terms similar to those with third parties, although in some cases nominal discounts are granted. Transactions with key management personnel are conducted on similar terms. No abnormal or non-commercial credit terms are allowed, and no impairments were recognised in relation to any transactions with key management personnel during the period, nor have they resulted in any non-performing debts at December 31  2023.

Trading relationships with associates and jointly controlled entities are generally concluded on terms similar to those of third parties and there are no abnormal or non-commercial credit terms allowed. No impairments of associates or jointly controlled entities were recognised during the period (H1F2023: nil).

Revenue disaggregation

Composition of revenue

• Revenue comprises amounts earned from customers from the sale of frozen, chilled, ambient, and non-food products (goods), and from the rendering of services.
• Revenue is disclosed net of Value Added Taxation.
• Revenue is net of returns and allowances, trade discounts, and volume rebates, all of which have been apportioned to the sale of goods.

		Half year ended December 31						Year ended June 30
R'000		2023 Unaudited		2022 Unaudited		% change		2023 Audited
Sale of goods – frozen		41 324 569		33 663 287		22,8		70 788 648
Sale of goods – chilled		32 588 613		24 419 459		33,5		55 303 603
Sale of goods – ambient		34 904 638		29 184 135		19,6		61 004 022
Sale of goods – non-food		4 845 221		4 333 351		11,8		8 948 959
Rendering of services and commissions earned		139 729		148 335		(5,8)		296 007
		113 802 770		91 748 567				196 341 239
Revenue percentage by customer type
Hotels, restaurants and cafés		43%		42%				43%
Caterers, butcheries and canteens		14%		14%				14%
Quick service restaurants		13%		12%				12%
Retail, wholesalers and other distributors		11%		13%				10%
Healthcare and aged care		8%		8%				9%
Education		5%		6%				6%
Travel (airlines and cruise liners)		3%		3%				3%
Government-related customers		3%		2%				3%
Analysis of revenue per country by percentage
United Kingdom		28%		25%				26%
Australia		13%		16%				15%
Netherlands		9%		9%				9%
New Zealand		7%		8%				8%
Italy		7%		7%				7%
Czech Republic		6%		6%				7%
Belgium		5%		5%				5%
People’s Republic of China and Hong Kong		4%		5%				5%
South Africa		4%		5%				4%
Other		17%		14%				14%

Financial instruments

When measuring the fair value of an asset or a liability, the group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques categorised as follows.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

		Non-current assets (liabilities)				Current assets (liabilities)
R'000		Investments	Puttable non- controlling interests	Vendors for acquisition		Puttable non- controlling interests	Vendors for acquisition	Total
December 31  2023
Financial assets measured at fair value		29 447	–	–		–	–	29 447
Financial liabilities measured at fair value		–	(5 320 284)	(34 749)		(210 786)	(304 154)	(5 869 973)
December 31  2022
Financial assets measured at fair value		29 262	–	–		–	–	29 262
Financial liabilities measured at fair value		–	(4 389 211)	(110 378)		(212 694)	(117 106)	(4 829 389)
June 30  2023
Financial assets measured at fair value		19 634	–	–		–	–	19 634
Financial liabilities measured at fair value		–	(5 408 028)	(88 994)		(217 899)	(337 112)	(6 052 033)

Fair value

R'000		Level 1	Level 2	Level 3	Total
December 31  2023
Financial assets measured at fair value		–	–	29 447	29 447
Financial liabilities measured at fair value		–	–	(5 869 973)	(5 869 973)
December 31  2022
Financial assets measured at fair value		–	–	29 262	29 262
Financial liabilities measured at fair value		–	–	(4 829 389)	(4 829 389)
June 30  2023
Financial assets measured at fair value		–	–	19 634	19 634
Financial liabilities measured at fair value		–	–	(6 052 033)	(6 052 033)

Valuation techniques and significant unobservable input

The table shows the valuation techniques used in measuring the DAC puttable non-controlling interests at December 31  2023:

Valuation technique		Unobservable inputs		Inter-relationship between significant unobservable inputs and fair value measurement
The expected payments are determined by considering the possible scenarios of forecast EBITDAs, the amount to be paid under each scenario and the probability of each scenario. The valuation models consider the present value of expected payment, discounted using a risk-adjusted discount rate.		Average revenue growth rates: 5,7% (2022: 6,5%) Average EBITDA margin: 6,5% (2022: 7,0%) Contractual EBITDA multiple: 10,5x (2022: 10,5x) Risk-adjusted discount rate: 1,7% (2022: 1,7%)		The estimated fair value would increase (decrease) if: the EBITDA were higher (lower); or the risk-adjusted discount rate were lower (higher).

Sensitivity analysis on changes in significant variable unobservable inputs for puttable non-controlling interests (liability)

		Increase in assumption %		Increase (decrease) in liability R’000		Decrease in assumption %		Increase (decrease) in liability R’000
Average EBITDA margin		10		561 536		10		(564 066)
Risk-adjusted discount rate		10		(30 839)		10		28 505
Revenue growth rates		10		85 048		10		(86 247)

The group recognises any changes in the value of the liability as a result of changes in assumptions used to estimate the future purchase price directly in retained earnings in the statement of changes in equity.

Exchange rates

The following exchange rates were used in the conversion of foreign interests and foreign transactions during the periods:

		December 31				June 30
		2023 Unaudited		2022 Unaudited		2023 Audited
Rand/Sterling
Closing rate		23,30		20,59		23,85
Average rate		23,43		20,35		21,40
Rand/Euro
Closing rate		20,20		18,22		20,50
Average rate		20,22		17,56		18,61
Rand/Australian dollar
Closing rate		12,46		11,61		12,51
Average rate		12,20		11,61		11,96

Supplementary pro forma information regarding the currency effects of the translation of foreign operations on the group

The pro forma financial information has been compiled for illustrative purposes only and is the responsibility of the board. Due to the nature of this information, it may not fairly present the group's financial position, changes in equity and results of operations or cash flows. The pro forma information has been compiled in terms of the JSE Listings Requirements and the Revised Guide on Pro Forma Information by SAICA.

The illustrative information, detailed below, has been prepared on the basis of applying the H1F2023 average Rand exchange rates to the H1F2024 foreign subsidiary income statements and recalculating the reported income of the group for the period.

		For the half year ended December 31							Illustrative 2023 at 2022 average exchange rates
R'000		2023 Unaudited		2022 Unaudited		% change					% change
Revenue		113 802 770		91 748 567		24,0			101 617 304		10,8
Trading profit		5 862 727		4 852 607		20,8			5 287 829		9,0
Headline earnings		3 854 911		3 244 634		18,8			3 470 756		7,0
Headline earnings per share (cents)		1 152,4		971,7		18,6			1 037,5		6,8
Constant currency per segment
Revenue
Australasia		23 704 674		21 752 049		9,0			22 397 837		3,0
United Kingdom		32 253 579		23 120 860		39,5			28 017 932		21,2
Europe		40 748 181		31 580 690		29,0			35 132 137		11,2
Emerging Markets		17 096 336		15 294 968		11,8			16 069 398		5,1
		113 802 770		91 748 567		24,0			101 617 304		10,8
Trading profit
Australasia		1 809 129		1 543 380		17,2			1 709 511		10,8
United Kingdom		888 938		908 828		(2,2)			772 200		(15,0)
Europe		2 308 022		1 579 358		46,1			1 987 573		25,8
Emerging Markets		929 789		894 279		4,0			886 245		(0,9)
Corporate office		(73 151)		(73 238)		0,1			(67 700)		7,6
		5 862 727		4 852 607		20,8			5 287 829		9,0

Acquisition of businesses and subsidiaries

Acquisitions

As at December 31  2023 one bolt-on acquisition was concluded in Australia of Midwest Foods, a food and liquor distributor servicing the Central West of New South Wales.

Goodwill arose on the acquisition as the anticipated value of future cash flows that were taken into account in determining the purchase consideration exceeded the net assets or net liabilities acquired at fair value. The acquisition has enabled the group to expand its range of complementary products, services and, as a consequence, has broadened the group's base in the marketplace. In addition, through the acquisition the group has acquired managements skill and expertise as a platform from which to consolidate the regional and vertical integration of the foodservice market.

Total investment in acquisition for the period was R206,9 million, the benefits of which will be evident in the medium term as we extract synergies and efficiencies. This bolt-on acquisition contributed R157,1 million to revenue and R6,5 million to trading profit for the period ended December 31  2023. The expected annual total contribution from this acquisition to revenue is R556 million and an increase in trading profit of R32 million. There were no significant contingent liabilities identified in the business acquired.

Subsequent events

There have been no material events subsequent to December 31  2023.

Administration

Directors

Chairman: S Koseff
Lead independent director: NG Payne
Independent non-executive directors: T Abdool-Samad, PC Baloyi, B Joffe, KR Moloko, CJ Rosenberg*, H Wiseman*
Executive directors: BL Berson* (chief executive officer), DE Cleasby (chief financial officer)

* Australian