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TIGER BRANDS LIMITED - Trading Statement

Release Date: 15/05/2014 10:00
Code(s): TBS     PDF:  
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Trading Statement

TIGER BRANDS LIMITED
“Tiger Brands” or “the Company”
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
Share code: TBS
ISIN: ZAE000071080


TRADING STATEMENT


Tiger Brands is satisfied that sufficient certainty exists with regard to its performance for the
six months ended 31 March 2014, to enable it to issue this trading statement.

Notwithstanding the tough trading conditions that continue to prevail in the domestic market,
the group is making steady progress in implementing key strategic initiatives aimed at
regaining market shares and further strengthening its core brands. The group experienced
significant cost inflation in its domestic businesses in the first half, partly due to the rapid
decline in the Rand exchange rate. This was not fully recovered in pricing and negatively
affected margins, particularly in the first quarter. With the exception of Dangote Flour Mills
(“DFM”), the International businesses, including Exports, have continued to deliver pleasing
growth.

Tiger Brands is focusing its attention on enhancing the long-term prospects of its investment
in DFM. In this regard, the Company continues to believe that Nigeria is central to its
expansionary ambitions. Short to medium term action plans are being implemented to turn
around the performance of the DFM business. The Company is also in the process of
evaluating a number of key strategic initiatives aimed at rapidly expanding the business into
more sustainable, value-added categories. At this stage, there is still a significant amount of
work that needs to be completed to properly evaluate the new category opportunities, which
if viable, should enhance margins and improve the capacity utilisation of existing DFM
assets.

Given the current underperformance of DFM and the excess milling capacity that continues
to increase in the Nigerian flour market, it was considered appropriate to carry out a review
of the carrying value of the Company’s investment in DFM. As it is not possible, at this stage,
to assess with any degree of certainty, the potential impact that the above category
initiatives could have, a decision has been taken to impair the full carrying value of the
goodwill and intangible assets relating to the investment. The value of the impairment
amounts to R849 million which will be included in abnormal items in the group income
statement for the half year ended 31 March 2014.

The carrying value of the Company’s investment in DFM will be re-evaluated at the end of
the financial year. At that time the Company will be able to assess the impact of recent
actions that would have been implemented as well as the results of its review of the new
category opportunities in DFM.

Excluding the DFM impairment, earnings per share from continuing operations for the six
months ended 31 March 2014 will increase by between 6% and 10% compared to the
corresponding figure for the same period last year, whilst headline earnings per share from
continuing operations will increase by between 5% and 9%. Taking the aforementioned
impairment into account, earnings per share from continuing operations are expected to
decline by between 50% and 55% relative to the corresponding prior period. However, the
increase in headline earnings per share from continuing operations will remain at between
5% and 9%.

Excluding the DFM impairment, total earnings per share, including discontinued operations,
will increase by between 7% and 11% compared to the corresponding figure for the same six
month period last year, whilst headline earnings per share, including discontinued
operations, will increase by between 4% and 8%. Taking the impairment into account, total
earnings per share, including discontinued operations, are expected to decline by between
50% and 55%.          However, the increase in headline earnings per share, including
discontinued operations, will remain at between 4% and 8%.

The Company is expected to release its interim results on 21 May 2014, at which time full
details in respect of the performance of the group will be provided.

The information in this trading statement has not been reviewed or reported on by the
Company’s auditors.




Bryanston
15 May 2014


Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited

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