Wrap Text
TBS - Tiger Brands Limited - Audited group results and dividend declaration for
the year ended 30 September 2011
TIGER BRANDS LIMITED
(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBS
ISIN: ZAE000071080
Audited group results and dividend declaration for the year ended 30 September
2011
HIGHLIGHTS
*Turnover +5,8%
*EPS +17,5%
*Normalised HEPS +5,7%
*Total dividend +6,0%
*Cash generated from operations R3,6 billion
*R2.1 billion spent on acquisitions
The condensed results for the year ended 30 September 2011 have been prepared in
accordance with International Financial Reporting Standards, IAS 34 - Interim
Financial Reporting - and the Listings Requirements of the JSE Limited.
Ernst & Young Inc., Tiger Brands Limited`s independent auditors, have audited
the consolidated annual financial statements of Tiger Brands Limited from which
the condensed consolidated financial results have been derived.
The auditors have expressed an unmodified audit opinion on the consolidated
annual financial statements. The condensed consolidated financial results
comprise the condensed consolidated statement of financial position at 30
September 2011, condensed consolidated statement of comprehensive income,
condensed consolidated statement of changes in equity and condensed consolidated
statement of cash flows for the year then ended, and selected explanatory notes.
The audit report of the consolidated annual financial statements is available
for inspection at Tiger Brands Limited`s registered office.
OVERVIEW
The year under review has been characterised by difficult macroeconomic
conditions in South Africa, flowing from the economic crisis in developed
markets and the slow pace of domestic economic recovery. South African
consumers remain under financial pressure, with rising unemployment and
declining disposable incomes due to the heavy debt burden of many households and
the rising cost of food, electricity and transport.
Against this background, although growth and market performance have slowed over
the past 12 months, the Group`s portfolio of strong brands has nevertheless
retained market leadership in their respective categories. Budget constraints
have led to consumers becoming more price conscious and relative price
positioning has therefore become critical in the face of increased competition.
Notwithstanding some weakening in volume shares, we have through the strength of
our brands, successfully protected our number one and two market positions.
FINANCIAL RESULTS
Group turnover increased by 5,8% to R20,4 billion (2010: R19,3 billion), despite
a 2,3% decline in volumes. The Group experienced good operational leverage,
increasing the average operating margin by 30 basis points to 15,9%. Operating
income increased by 7,6% to R3,2 billion. Excluding the impact of acquisitions,
operating income grew by 4% to R3,1 billion and the operating margin improved by
10 basis points to 15,7%.
Income from Associates increased by 5,4% to R265,4 million and comprises the
Group`s share of earnings from Empresas Carozzi (Carozzi), Oceana Group Limited
(Oceana) and UAC Foods (acquired in May 2011). These companies collectively
contributed a sizeable 10,3% to the Group`s after tax profit in 2011.
Profit before tax increased by 19,1% to R3,6 billion (2010: R3,0 billion). This
included a R91,4 million once-off abnormal credit related to the take-on gain
arising from the recognition of National Foods Holdings Limited (National Foods)
as an associate Company, as well as the employer share of pension fund surpluses
amounting to R44,3 million. The Group has held its 25,7% shareholding in
National Foods, a Zimbabwean milling and consumer goods business, for many years
but has not previously recognised its share of earnings from the Company due to
the hyperinflationary economic climate in Zimbabwe. Subsequent to the financial
year-end, the Group has increased its shareholding in National Foods by 11,7% to
37,4% and, with effect from 1 October 2011, will equity account its share of
earnings from the Company.
The Group`s effective tax rate before abnormal items was 31,3% (2010: 29,7%),
primarily reflecting the increased STC charge on dividends declared during the
year. In the prior year, the Group made capital distributions out of share
premium, which were not subject to STC.
Net profit for the year attributable to ordinary shareholders increased by 18%
to R2,6 billion (2010: R2,2 billon). On an adjusted basis, excluding the impact
of the prior year`s IFRS 2 charge of R152,7 million after tax relating to the
BEE Phase II transaction, net profit increased by 10,2%.
Earnings per share increased by 17,5% to 1 629 cents (2010: 1 386 cents) and
headline earnings per share increased by 13,0% to 1 575 cents (2010: 1 393
cents). On a normalised basis, excluding the prior year IFRS 2 BEE charge,
headline earnings per share increased by 5,7%.
The Group continues to be highly cash generative and generated R3,6 billion cash
from operations during the year (2010: R3,4 billion). This was used to fund
higher tax and dividend payments, resulting in a net cash inflow from operating
activities of R1,4 billion, which approximated the amount generated in the
previous year. The Group spent R2,1 billion on acquisitions and acquired
additional interest bearing debt of R244,7 million as part of its acquisition
programme. In line with its capital maintenance and expansion strategy, the
Group invested R817,8 million on capital assets, compared to R634,2 million in
the prior year.
OPERATING RESULTS
GRAINS
Cost inflation re-emerged as the world prices of wheat and maize increased
significantly during the year due to tighter global supply. However, the impact
was limited to an extent by the benefit of the strong Rand as well as the
Group`s favourable procurement positions during the year.
The Grains division achieved a commendable performance for the year in the face
of fierce competitive activity. Wheat and baking volumes contracted as a result
of sustained deep price discounting of bread and other wheat based products by
competitors. The Company, however, successfully widened its distribution base
into previously underserved markets, thereby preserving scale and protecting
margins in the milling and baking business. At the end of the financial year,
Albany maintained its leading market share position. The maize business also
experienced a volume decline due to significant price inflation in the period,
which resulted in some consumer shift from maize to other carbohydrates.
Notwithstanding the volume decline, which mirrored the overall performance of
the category, the Ace brand maintained its strong number two position in the
market.
The rice and breakfast cereals businesses performed well, benefiting from strong
demand and price deflation in the cost of rice and sorghum. The Jungle brand
benefited from a change in mix towards higher value products. Tastic retained
its clear number one market share position, reflecting the brand`s strength in a
competitive market.
During September 2011, the Durban bakery upgrade was completed, at a total cost
of R108 million. A coastal bakery in KwaZulu-Natal was closed as part of an
ongoing consolidation plan, with manufacturing volumes being transferred to the
new Pietermaritzburg bakery. The construction of the new Hennenman wheat mill
is progressing well and remains on track for completion in December 2012.
CONSUMER BRANDS
Competition intensified across the consumer goods sector and retailers continued
to increase their support for economy and dealer-owned brands. In addition,
given the Rand`s strength and the relatively high cost of local agricultural
products and escalating input costs, retailers have been able to import selected
goods at favourable prices, further adding to the competitive pressure. Against
this background, the division`s volumes and market shares have come under
pressure. However, we have worked hard to restore our competitiveness by
implementing a number of initiatives to improve operational efficiencies and
reduce costs, including the integration of the home care, personal care and baby
care businesses under a single management team and the consolidation of the
management of the snacks, treats and beverages businesses.
Groceries
Turnover grew by 8%, driven by a 6% increase in sales volumes and a 2% increase
in pricing. Growth was strongest in the vegetables and spreads categories,
which experienced double-digit sales growth, with the core Koo and Black Cat
brands performing well. The condiments division also performed strongly, with
the All Gold tomato sauce and Crosse & Blackwell mayonnaise brands delivering
good revenue growth, mainly driven by strong volumes. The pasta business
delivered moderate volume growth in a highly competitive market. This resulted
in inflationary cost pressures being absorbed, which negatively impacted
margins.
The Koo brand was named South Africa`s number one brand in the Sunday Times Top
Brands awards. In the tinned foods category, Koo, Lucky Star (owned by Oceana)
and All Gold took the top three positions.
Snacks & Treats
This discretionary spend category has been hard hit by the depressed
macroeconomic environment. In addition, the snacks and treats business was
unable to operate at full production levels due to industrial action during
September. This impacted negatively on both factory recoveries and sales
volumes and a loss was sustained for the month. The strike has since been
resolved and normal production resumed in mid-October. Measures have been taken
to restore volumes and margins in this category.
Beverages
The beverages business was negatively impacted by the unusually cold winter
which resulted in volumes declining across the sector. The Energade brand
strengthened its number one position in the sports category and Oros grew its
market share. The market saw strong growth in the dairy fruit blend category,
where the Hall`s and Super 7 brands came under pressure from intense pricing
competition.
Value-added meat products ("VAMP")
This business lost market share during the year due to intense competition from
new and existing participants in the polony market, which constitutes
approximately 55% of the total processed meat market in volume terms. The
overall operating margin declined from 10,6% in 2010 to 8,5% in 2011 primarily
as a result of cost push pressures in the price of pork and mechanically deboned
meat (MDM), which are key raw material ingredients.
Home care, personal care and baby care ("HPCB")
During 2011, the home care, personal care and baby care businesses were merged
under a single management team. Over 150 product lines were discontinued in an
effort to focus on core brands and enhance efficiencies. This remains work in
progress and our strategy in the personal care business is to focus on
profitable market segments. The Status brand, a male deodorant product range,
was acquired with effect from 1 November 2011. This will result in Tiger Brands
becoming a significant participant in this market segment.
The baby care business continues to perform well. Category extensions and the
introduction of new products, including Pedia Kids, a range of children`s
pharmaceutical products positioned in the higher value growth segment of the
over-the-counter market, contributed to the good performance.
In the home care category, the business experienced heightened competition,
particularly from the multinationals. This has put pressure on margins as a
result of the inability to fully recover cost increases. The business
successfully maintained its leading market position in the key pest category.
EXPORTS AND INTERNATIONAL
The year under review was characterised by an excellent performance from the
export division, as well as further satisfactory progress from Haco Tiger Brands
and Chococam. Underpinning this performance was the combination of robust volume
growth, continued investment in the core brands and a sharp focus on cost
containment.
Kenya: Haco Tiger Brands (51% held by Tiger Brands)
This home care and personal care business was acquired with effect from 1 June
2008 and has continued to record excellent growth. Volumes increased 21% in the
year under review with margins being held at approximately 10%. This has been
achieved despite in-country inflationary pressures and the associated pressure
on consumer spending.
Cameroon: Chococam (74.7% held by Tiger Brands)
This confectionery business was acquired in August 2008. It has shown good
progress, with volumes increasing by 5% in 2011. Significant increases in the
cost of key raw materials such as cocoa and sugar resulted in margin pressures
in the first half of the financial year. A border dispute adversely impacted
export volumes in the first quarter of the financial year as Gabon`s borders, a
key export market for Chococam, were closed for three months. A focus on
operational efficiencies and some price recovery in the market, saw margins
restored in the second half of the financial year.
Langeberg and Ashton Foods (67% held by Tiger Brands)
Langeberg and Ashton Foods is one of the largest global producers of canned
fruit and approximately 80% of its products are exported. This business was
adversely affected during the year by the Rand`s strength. Despite rising
international consumption, European and South American agricultural subsidies,
together with prevailing duty structures, impacted the Company`s ability to
compete effectively.
ACQUISITIONS
During the year, the Group significantly advanced its ambition of meaningfully
extending its footprint into the rest of Africa, through the following four
acquisitions which were concluded at a total cost of R2,1 billion:
Davita Trading (100% held by Tiger Brands)
The acquisition of this South African based export Company was effective from 31
May 2011. The business exports powdered juices and seasonings to 28 countries in
Africa and the Middle East and has leading market shares in many of its key
geographies. Revenue synergies are being pursued through select Group brands,
as well as through the Company`s extensive Africa distribution footprint, which
is complementary to Tiger Brands` own export platform.
Ethiopia: East Africa Tiger Brands Industries (51% held by Tiger Brands)
The acquisition of a 51% stake in the branded consumer interests of the East
Africa Group of Companies of Ethiopia, became effective in May 2011. Ethiopia is
the second most populated country in Africa with more than 80 million people. It
is also experiencing high GDP growth levels of around 11% per annum. The Company
has the leading market share in laundry soap and detergents and is the second
largest participant in the pasta and personal care market sectors. The Company
is performing in line with expectations.
Nigeria: Deli Foods (100% held by Tiger Brands)
Tiger Brands acquired this biscuit, cracker and wafer business in April 2011.
The business has shown excellent volume and sales momentum, although there has
been some pressure on margins due to increasing sugar and wheat prices.
Nigeria: UAC Foods (49% associate held by Tiger Brands)
In May 2011, Tiger Brands acquired a 49% equity stake in UAC Foods, whose
business comprises the food and dairy operations of UAC Plc, a diversified
Nigerian listed company. The joint venture holds a number of Nigeria`s heritage
brands such as Gala (sausage rolls), Supreme (ice cream) and Swan (bottled
spring water). The 2011 year has been characterised by increased input costs
and the resultant operational challenges.
DIRECTORATE AND EXECUTIVE COMMITTEE
During the year, we welcomed Olufunke (Funke) Ighodaro to the Board, as Chief
Financial Officer and Executive Director, and Phil Roux to the Executive
Committee as Business Executive: Consumer Brands.
In line with best governance practice, the Board decided to limit the number of
executive directors serving on the Board to only the CEO and the finance
function. Accordingly, Neil Brimacombe and Bongiwe Njobe, the Group executives
responsible for the international businesses and corporate affairs and
sustainability respectively, stood down as directors of the Company but retain
their Group portfolios. We are grateful to them for their valuable contribution
to the Board.
FINAL ORDINARY DIVIDEND
The Board has decided to declare a final ordinary dividend of 510 cents per
share for the year ended 30 September 2011. This dividend, together with the
interim dividend of 281 cents per share (2010: 270 cents), brings the total
dividend for the year to 791 cents per share (2010: 746 cents per share). The
total payment of 791 cents per share represents an increase of 6,0% on the total
payment of 746 cents per share declared in respect of the previous year.
The Company`s stated policy of paying an annual dividend, based on a headline
earnings cover of two times, remains in place.
OUTLOOK
Trading conditions are expected to remain difficult during 2012, with
unemployment and limited disposable incomes continuing to negatively affect
consumer spending. Food price inflation is likely to persist, driven by
increases in global soft commodity prices, packaging, transport and energy
costs, as well as rising wage demands. The volatility of foreign currency
exchange rates is expected to add to these challenges. We are confident,
however, that the inherent strength and continued relevance of the Group`s well
balanced portfolio of brands, will provide acceptable growth in the 2012
financial year.
In line with our strategy, we will continue to selectively seek value enhancing
opportunities to expand our geographic footprint.
INTEGRATED REPORT
The integrated report for the year ended 30 September 2011 will be posted during
December 2011 to certificated shareholders and those shareholders with
dematerialised shares who have requested a copy of the report through their
Central Securities Depository Participants (CSDP`s).
Salient features of the integrated report will be available on the Company`s
website (www.tigerbrands.com) shortly after the integrated report is posted.
PREPARATION OF RESULTS
The preparation of these results has been supervised by O Ighodaro, Chief
Financial Officer of Tiger Brands Limited.
For and on behalf of the Board
Lex van Vught Peter Matlare
Chairman Chief Executive Officer 22 November 2011
DECLARATION OF FINAL DIVIDEND NO 134
The Board has approved a final ordinary dividend of 510 cents per share for the
year ended 30 September 2011. Shareholders are advised of the following dates
in respect of the final dividend:
Last day the shares trade cum the final dividend Friday, 6 January 2012
Shares trade ex the final dividend Monday, 9 January 2012
Record date to determine those shareholders
entitled to receive the final dividend Friday, 13 January 2012
Payment in respect of the final dividend Monday, 16 January 2012
Share certificates may not be dematerialised or re-materialised between Monday,
9 January 2012 and Friday, 13 January 2012, both days inclusive.
By order of the Board
IWM Isdale
Secretary
Sandton
23 November 2011
Condensed consolidated income statement
For the year ended 30 September
Audited Audited
2011 2010 Change
Notes Rm Rm %
Revenue 1 20 479 19 378 6
Turnover 1 20 430 19 316 6
Operating income before 2 3 245 3 015 8
abnormal items
Abnormal items 3 127 (188)
Operating income after 3 372 2 827 19
abnormal items
Finance costs* (84) (126) 34
Interest received 20 43 (55)
Investment income 19 19 -
Income from associates 4 265 252 5
Profit before taxation 3 592 3 015 19
Taxation (1 014) (840) (21)
PROFIT FOR THE YEAR 2 578 2 175 19
Attributable to:
Owners of the parent 2 584 2 192 18
Non-controlling interests (6) (17)
2 578 2 175 19
Basic earnings per 1 629 1 386 18
ordinary share (cents)
Diluted basic earnings per 1 598 1 364 17
ordinary share (cents)
*Excludes interest capitalised to property, plant and equipment amounting to
R20m (2010: R6m).
Consolidated statement of comprehensive income
For the year ended 30 September
Audited Audited
2011 2010
Rm Rm
Profit for the year 2 578 2 175
Net (loss)/gain on hedge of net investment (19) 30
in foreign operation
Foreign currency translation adjustments 95 (37)
Net gain/(loss) on cash flow hedges 45 (20)
Net (loss)/gain on available for sale (20) 91
financial assets
Tax effect 16 (18)
Total comprehensive income for the year net 2 695 2 221
of tax
Attributable to:
Owners of the parent 2 701 2 238
Non-controlling interests (6) (17)
2 695 2 221
Condensed consolidated statement of financial position
As at 30 September
Audited Audited
2011 2010
Rm Rm
ASSETS
Non-current assets 9 503 6 289
Property, plant and equipment 3 317 2 586
Goodwill 2 362 1 156
Intangible assets 1 464 830
Investments 2 360 1 717
Current assets 6 693 6 695
Inventories 3 037 2 899
Trade and other receivables 3 150 2 875
Cash and cash equivalents 506 921
TOTAL ASSETS 16 196 12 984
EQUITY AND LIABILITIES
Capital and reserves 9 860 8 316
Non-controlling interests 386 285
TOTAL EQUITY 10 246 8 601
Non-current liabilities 1 214 878
Deferred taxation liability 300 123
Provision for post-retirement medical aid 377 351
Long-term borrowings 537 404
Current liabilities 4 736 3 505
Trade and other payables 2 559 2 579
Provisions 435 388
Taxation payable 102 62
Short-term borrowings* 1 640 476
TOTAL EQUITY AND LIABILITIES 16 196 12 984
* A subsidiary breached a maintenance covenant on its short-term borrowing
facility. The balance, included in short-term borrowings, amounted to R447
million. The subsidiary applied for the breach to be condoned, with the request
being granted subsequent to 30 September 2011.
Other salient features
For the year ended 30 September
Audited Audited
2011 2010
Net worth per ordinary share (cents) 6 209 5 247
Net debt/(cash) to equity (%) 16,3 (0,5)
Interest cover - net (times) 50,9 36,8
Current ratio (:1) 1,4 1,9
Capital expenditure (R million) 818 634
- replacement 387 363
- expansion 431 271
Capital commitments (R million) 421 817
- contracted 299 547
- approved not contracted 122 270
Capital commitments will be funded from
normal operating cash flows and the
utilisation of existing borrowing
facilities.
Contingent liabilities (R million)
- guarantees and contingent liabilities 44 15
Inventories carried at net realisable value 71 134
Write-down of inventories recognised as an 36 21
expense
Carrying and fair value of investments (R 2 360 1 717
million)
Listed (fair value) 361 389
Unlisted (fair value) 206 161
Associates (carrying value) 1 793 1 167
Condensed segmental analysis
For the year ended 30 September
Audited Audited
2011 2010 Change
Rm Rm %
Turnover
Domestic Operations 18 049 17 494 3
Grains 8 349 8 085 3
Milling and baking 6 192 5 849 6
Other Grains 2 157 2 236 (4)
Consumer Brands 9 704 9 417 3
Groceries 3 423 3 167 8
Snacks & Treats 1 734 1 726 -
Beverages 1 029 1 083 (5)
Value Added Meat Products 1 419 1 385 2
Out of Home 295 269 10
HPCB 1 804 1 787 1
Personal 589 597 (1)
Babycare 629 591 6
Homecare 586 599 (2)
Domestic intergroup sales (4) (8) 50
International and Exports 2 381 1 822 31
Exports** 712 370 92
International operations 822 504 63
Deciduous Fruit 962 1 086 (11)
Other intergroup sales (115) (138) 16
TOTAL TURNOVER 20 430 19 316 6
Operating income before abnormal
items
Domestic Operations 3 036 2 989 2
Grains 1 746 1 678 4
Milling and baking 1 382 1 364 1
Other Grains 364 314 16
Consumer Brands 1 457 1 462 -
Groceries 524 446 17
Snacks & Treats 195 235 (17)
Beverages 94 112 (16)
Value Added Meat Products 121 147 (18)
Out of Home 69 63 9
HPCB 454 459 (1)
Personal 156 170 (8)
Babycare 184 168 10
Homecare 114 121 (6)
Other* (167) (151) (11)
International and Exports 209 26 704
Exports** 170 54 215
International operations 82 57 44
Deciduous Fruit (43) (85) 49
TOTAL OPERATING INCOME BEFORE 3 245 3 015 8
ABNORMAL ITEMS
*Includes the corporate office and management expenses relating to international
investments. Also included are cash settled IFRS 2 charges of R64 million (2010:
R62 million) and IFRS 2 charges relating to the Phase I and II Black Economic
Empowerment transactions of R50 million (2010: R56 million).
**Includes Davita Trading (Pty) Limited with effect from 31 May 2011.
Condensed consolidated cash flow statement
For the year ended 30 September
Audited Audited
2011 2010
Rm Rm
Cash operating profit 3 777 3 493
Working capital changes (173) (113)
Cash generated from operations 3 604 3 380
Net financing costs (64) (82)
Dividends received 171 149
Taxation paid (1 046) (821)
Cash available from operations 2 665 2 626
Capital distributions and dividends paid (1 230) (1 180)
Net cash inflow from operating activities 1 435 1 446
Net cash outflow from investing activities (2 915) (1 100)
Net cash (outflow)/inflow from financing (96) 1
activities
Net (decrease)/increase in cash and cash (1 576) 347
equivalents
Effects of exchange rate changes 56 (11)
Cash and cash equivalents at the beginning of 508 172
the year
Cash and cash equivalents at the end of the (1 012) 508
year
Cash resources 506 921
Short-term borrowings regarded as cash and (1 518) (413)
cash equivalents
(1 012) 508
Condensed consolidated statement of changes in equity
Shares
held by
Share subsidiary
capital Non-distri Accumu- and
and butable lated empowerment
premium reserves profits entities
Rm Rm Rm Rm
Balance at 30 71 789 7 310 (1 320)
September 2009
Profit for the year - - 2 192 -
Other comprehensive - 46 - -
income for the year
71 835 9 502 (1 320)
Issue of share 1 765 - - (1 625)
capital and premium
Capital (1 355) - - 200
distributions out of
share premium
BEE Phase II capital - - - -
contribution
Transfers between - 122 (122) -
reserves
Share-based payment - - - -
reserve
Dividends paid to - - (13) -
empowerment entities
and non-controlling
interests
Sale of shares by - - - 4
empowerment entity
Balance at 30 481 957 9 367 (2 741)
September 2010
Profit for the year - - 2 584 -
Other comprehensive - 117 - -
income for the year
481 1 074 11 951 (2 741)
Issue of share 26 - - -
capital and premium
Capital distribution (437) - - 65
out of share premium
Acquisition of East - - - -
Africa Tiger Brands
Industries
Transfers between - 115 (115) -
reserves
Share-based payment - - - -
reserve
Dividends on - - (857) -
ordinary shares
Total dividends - - (1 001) -
Less: Dividends on - - 144 -
treasury and
empowerment shares
Balance at 30 70 1 189 10 979 (2 676)
September 2011
Condensed consolidated statement of changes in equity (continued)
Share- Total attri-
based butable Non-
payment to owners of controlling
reserve the parent interests Total
Rm Rm Rm Rm
Balance at 30 134 6 984 301 7 285
September 2009
Profit for the year - 2 192 (17) 2 175
Other comprehensive - 46 - 46
income for the year
134 9 222 284 9 506
Issue of share - 140 - 140
capital and premium
Capital - (1 155) (9) (1 164)
distributions out of
share premium
BEE Phase II capital - - 13 13
contribution
Transfers between - - - -
reserves
Share-based payment 118 118 - 118
reserve
Dividends paid to - (13) (2) (15)
empowerment entities
and non-controlling
interests
Sale of shares by - 4 (1) 3
empowerment entity
Balance at 30 252 8 316 285 8 601
September 2010
Profit for the year - 2 584 (6) 2 578
Other comprehensive - 117 - 117
income for the year
252 11 017 279 11 296
Issue of share - 26 - 26
capital and premium
Capital distribution - (372) - (372)
out of share premium
Acquisition of East - - 107 107
Africa Tiger Brands
Industries
Transfers between - - - -
reserves
Share-based payment 46 46 - 46
reserve
Dividends on - (857) - (857)
ordinary shares
Total dividends - (1 001) - (1 001)
Less: Dividends on - 144 - 144
treasury and
empowerment shares
Balance at 30 298 9 860 386 10 246
September 2011
Notes
Audited Audited
2011 2010
Rm Rm
1. Revenue
Turnover 20 430 19 316
Interest received 20 43
Dividend income 19 19
Rental income, fee income and other 10 -
20 479 19 378
2. Operating income and EBITDA
Operating income before abnormal items is
reflected after charging:
Depreciation (included in cost of sales and 373 310
other operating expenses)
Amortisation (included in cost of sales and 11 6
other operating expenses)
Reconciliation of Earnings Before Interest,
Taxation, Depreciation and Amortisation
("EBITDA")
Operating income before abnormal items 3 245 3 015
Add: Depreciation and amortisation 384 316
EBITDA 3 629 3 331
3. Abnormal items
Equity accounted take-on gain - National 91 -
Foods Holdings Zimbabwe
Recognition of pension fund surpluses 44 1
Profit on sale of investments 1 1
Impairment of intangible assets (7) -
Impairment of property, plant and equipment (3) -
Empowerment transaction costs - BEE Phase II - (188)
Other 1 (2)
Abnormal profit/(loss) before taxation 127 (188)
Taxation (12) 36
Abnormal profit/(loss) attributable to 115 (152)
owners of the parent
4. Income from associates
Normal trading 265 260
Goodwill impairment - Oceana - (8)
265 252
5. Business combinations
2011
5.1 Deli Foods
On 4 April 2011, Tiger Brands acquired 100% of the issued share capital of Deli
Foods Nigeria Limited, a Company engaged in the manufacturing and marketing of
biscuits for the Nigerian market. The acquisition is in line with Tiger Brands`
strategy to expand into the African continent and is seen as a first step in
entering into this important market.
From date of acquisition to 30 September 2011, the Deli Foods business
contributed R188 million to Group revenue and R4 million to profit after tax and
interest.
Had the acquisition been effective on 1 October 2010, Deli Food`s estimated
contribution to Group revenue would have been R347 million and profit after tax
and interest would have been R nil million.
Goodwill represents the difference between the purchase consideration and the
fair value of the net assets.
The purchase consideration was financed out of operating cash flows.
5.2 East Africa Tiger Brands Industries
Effective 29 April 2011, a transaction was finalised with the East African Group
of Companies of Ethiopia relating to the formation of a new food and HPC Company
which will operate in the Ethiopian market. The Company, known as East Africa
Tiger Brands Industries, is held 51% by Tiger Brands and the balance of 49% by
East African Group (Eth) Plc and its associate companies.
From date of acquisition to 30 September 2011, the East Africa Tiger Brands
Industries business contributed R92 million to Group revenue and R1 million to
profit after tax and interest.
Goodwill represents the difference between the purchase consideration and the
fair value of the net assets acquired.
The purchase consideration was financed out of operating cash flows.
5.3 Davita Trading (Pty) Limited
Effective 31 May 2011, Tiger Brands acquired the entire issued share capital of
Davita Trading (Pty) Limited (Davita). Davita is a South African manufacturer
and exporter of powdered seasonings and beverage products with a presence in 28
countries across Africa and the Middle East. Davita has an established
distribution footprint on the African continent which will provide Tiger Brands`
export division with new growth vectors by leveraging off Davita`s solid
distributor relationships and penetrating new geographies, as well as deepening
market penetration in existing markets. The existing infrastructure within the
Tiger Brands export division will assist in driving further growth across the
expanded product portfolio.
From date of acquisition to 30 September 2011, the Davita Trading business
contributed R222 million to Group revenue and R43 million to profit after tax
and interest.
Had the acquisition been effective on 1 October 2010, Davita Trading`s estimated
contribution to Group revenue would have been R621 million and profit after tax
and interest would have been R77 million .
Goodwill represents the difference between the purchase consideration and the
fair value of the net assets acquired. Davita will provide additional synergies
as a potential manufacturer of certain products for Tiger Brands` South African
business units.
The purchase consideration was financed out of operating cash flows.
5.4 The purchase consideration for the abovementioned acquisitions was accounted
for as follows:
Acquisition value
East Africa
Deli Tiger Brands Davita
Foods Industries Trading Total
Rm Rm Rm Rm
Land and buildings 26 68 22 116
Plant and equipment 70 49 17 136
Inventories 28 43 44 115
Trade receivables* 16 - 116 132
Cash and cash - 111 150 261
equivalents
Fair value of assets 140 271 349 760
acquired
Long-term borrowings (29) (29) (186) (244)
Trade payables (24) (12) (22) (58)
Taxation payable - - (88) (88)
Short-term (22) (13) - (35)
borrowings including
bank overdrafts
Deferred taxation (15) - (163) (178)
liability
Fair value of the (90) (54) (459) (603)
liabilities acquired
Fair value of net 50 217 (110) 157
assets acquired
Non-controlling - (107) - (107)
interest
Trademarks 33 - 101 134
Customer lists 48 - 474 522
Goodwill 143 11 1 057 1 211
Purchase 274 121 1 522 1 917
consideration in
cash
*Deli Foods: gross trade receivables of R16 million less allowance for doubtful
debts of R nil.
Davita Trading: gross trade receivables of R116 million less allowance for
doubtful debts of R nil.
Audited Audited
2011 2010
Rm Rm
6. Headline earnings per share
Headline earnings per ordinary share (cents) 1 575 1 393
Diluted headline earnings per ordinary share 1 545 1 371
(cents)
2011 2010
Rm Rm
7. Reconciliation between profit for the
year and headline earnings
Profit attributable to ordinary shareholders 2 584 2 192
Adjusted for:
Equity accounted take-on gain - National (91) -
Foods Holdings Zimbabwe
(Profit)/loss on sale of property, plant and (2) 4
equipment
Profit on sale of investments (1) (1)
Impairment of intangible assets 6 -
Impairment of property, plant and equipment 2 -
Associates - goodwill impairment - 8
Headline earnings for the year 2 498 2 203
Tax effect on headline earnings adjustments 1 (2)
8. Capital distributions and dividends per
share
Capital distributions and dividends per 791 746
ordinary share (cents)
Capital distribution declared 17 May 2010 - 270
Capital distribution declared 23 November - 235
2010
Dividend declared 23 November 2010 - 241
Dividend declared 27 May 2011 281 -
Dividend declared 22 November 2011 510 -
9. Subsequent events
9.1 Effective 21 October 2011, Tiger Brands acquired an additional 12%
shareholding in National Foods Holdings Limited in Zimbabwe, taking the
effective shareholding to 37%.
The cost of the additional shares amounted to R97 million.
9.2 Effective 1 November 2011, Tiger Brands acquired the Status brand from
Unilever PLC and Unilever South Africa (Pty) Limited. The acquisition is in line
with Tiger Brands` strategy of expanding into adjacent categories with well
established brands. The purchase consideration, accounted for from 1 November
2011, comprised trademarks amounting to R205 million and inventories amounting
to R9 million.
The purchase consideration was financed out of operating cash flows.
Concurrent with the acquisition of the Status brand, Tiger Brands disposed of
the Mousson trademark and related inventories to Unilever South Africa (Pty)
Limited for an amount of R39 million.
10. Changes in accounting policies
The accounting policies adopted and methods of computation are consistent with
those of the previous financial year, except for the adoption of the following
new and amended IFRS standards and IFRIC interpretations during the current
year:
- IFRS 1 (Amendment) - Limited exemption from comparative IFRS 7 disclosures for
first-time adopters
- IFRS 2 (Amendment) - Group cash-settled share-based payment arrangements
- IAS 32 (Amendment) - Classification of rights issues
- IFRIC 19 - Extinguishing financial liabilities with equity instruments
- April 2009 Improvements to IFRS (improvements effective for the current
financial year)
- May 2010 Improvements to IFRS (improvements effective for the current
financial year)
Where necessary, disclosures have been updated in accordance with these
standards, amendments or interpretations. The adoption thereof did not have a
material impact on the results, cash flows or financial position of the Group in
the current year.
Sponsor: J.P Morgan Equities limited
TIGER BRANDS LIMITED
Non-executive: L C van Vught (Chairman), B L Sibiya (Deputy Chairman), S L
Botha, R M W Dunne (British), M P Nyama, M Makanjee, K D K Mokhele, R D Nisbet,
A C Parker
Executive: P B Matlare (Chief Executive Officer), O Ighodaro (Chief Financial
Officer) (Nigerian), C F H Vaux
Company secretary: I W M Isdale
Registered office: 3010 William Nicol Drive, Bryanston, Sandton, 2021
Postal address: PO Box 78056, Sandton, 2146, South Africa
Share registrars: Computershare Investor Services (Pty) Limited, 70 Marshall
Street, Johannesburg, 2001
Postal address: PO Box 61051, Marshalltown, 2107, South Africa. Telephone: (011)
370 5000
Date: 23/11/2011 07:22:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
