Wrap Text
Unaudited group results for the six months ended 31 March 2014
Tiger Brands Limited
Registration number 1944/017881/06
Incorporated in the Republic of South Africa
Share code: TBS ISIN:ZAE000071080
Unaudited group results for the six months ended 31 March 2014
Commentary
OVERVIEW
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 current period,
partly due to the rapid decline in the Rand exchange rate. This was not fully recovered in pricing and negatively
impacted on margins, especially in the first quarter. Pricing has since been adjusted to restore margins and
improve profitability; however, the group continues to partially absorb cost increases in a number of categories,
mitigating the impact, where possible, through cost reduction initiatives and improved efficiencies. With the
exception of Dangote Flour Mills, the International businesses, including Exports, have continued to deliver
pleasing growth.
DANGOTE FLOUR MILLS (“DFM”)
Tiger Brands is focusing its attention on enhancing the long-term prospects of its investment in DFM. In this regard,
the Board of Tiger Brands continues to believe that Nigeria is central to the group’s long-term expansionary ambitions.
Short- to medium-term action plans are being implemented to turn around the performance of the business. These include
reducing DFM’s fixed cost base, mothballing of mills where appropriate, and rebuilding the brand equity of its product
basket, which has suffered from quality issues and internal inefficiencies.
In addition to the above, Tiger Brands, together with DFM, is 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 these new category opportunities
which, if they prove viable, should enhance margins and improve the capacity utilisation of the 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 accurately assess with any degree of certainty, the potential impact that
the aforementioned 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, amounting to R849 million, has
been included as an abnormal item in the group income statement for the period under review.
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 the recent actions that would have been implemented, as well
as the results of its review of the new category opportunities in DFM.
FINANCIAL REVIEW
Turnover from continuing operations for the six months ended 31 March 2014, which amounted to R14,9 billion, was 11%
higher than the corresponding figure in the prior year. The Dangote AgroSacks business, which was disposed of by DFM
in December 2013, for a consideration of Naira 7,5 billion (R497million), has been accounted for as a discontinued
operation for the period up until its disposal. This is consistent with the accounting treatment adopted in the
financial year ended 30 September 2013.
The group’s overall gross margin declined by 0,9% to 30,9%, negatively influenced by the inflationary effects of
the weak Rand on input costs, which were not fully recovered in pricing in the South African operations. The
operating margin declined by 0,2% to 11,5%, benefiting from a R3,1 million IFRS 2 share-based payment credit
compared to a charge of R93,8 million in the corresponding prior period.
Turnover for the domestic businesses of R11,2 billion showed an improvement of 8%, whereas the Export and
International businesses, including Nigeria, grew turnover by 20% to R3,7 billion, benefiting to an extent from
the weaker Rand.
Domestic sales volumes increased by 4%, with selling price increases generally in line with or below inflationary
levels. Sales volumes achieved by the Export and International businesses (excluding Nigeria) were strong, but this
was offset by pressure on volumes at DFM, primarily due to intense competitor activity.
The operational performance in the first half was mixed, with the Grains division achieving pleasing growth especially
within the MillBake and the Breakfast categories. The domestic performance was weighed down by a weaker result in the
Maize, Groceries and HPCB businesses. Realisations in the Groceries business were maintained in the first quarter in
order to stimulate volume recovery. This objective was successfully achieved with strong volume growth and improved
market shares recorded in the quarter. However, rising input costs resulted in significant margin erosion, which should
ease over the balance of the year, as pricing is adjusted to partially absorb the higher costs. The Homecare and
Personal care businesses continue to face stiff competition in the market as competitors increase their promotional
activity. Plans are underway to drive innovation more aggressively in these categories and to refocus on core brands.
The strategic cost saving projects that commenced in the previous year remain on track, with the relocation of the
tomato paste plant to Musina as well as the consolidation of the beverage facilities at Roodekop having been
successfully completed. Initial supply constraints were experienced in the Beverage business; however, these have
now been largely resolved. The standardisation and rollout of various IT systems across the group are scheduled for
completion in the second half of 2015.
The Export and International businesses outside Nigeria continue to show strong growth, benefiting to some extent from
the Rand’s relative weakness. Trading conditions in the Nigerian market remain challenging and DFM has continued to
sustain operating losses in the period, primarily because of on-going top-line pressures. In addition, the impact of
significant price discounting in a market that has over-capacity continues to place pressure on margins.
As indicated above, the turnaround in the performance of DFM over the medium term remains a key objective, which is
receiving focused management attention.
Operating income for the period of R1,7 billion is 9% higher than in the corresponding prior period.
Net financing costs increased as a result of higher average debt levels whilst the overall effective tax rate
benefited from special incentive allowances granted in respect of qualifying capital projects.
Income from associate companies grew by 4% to R266 million, with good performances recorded by Oceana, UAC Foods
and National Foods Holdings. However, the share of profits from Empresas Carozzi was well below the previous
year. This was primarily due to increased market competition and crop failure in the domestic deciduous fruit
market, which affected the supply of certain key products.
As outlined above, the group has impaired the full carrying value of the goodwill and intangible assets relating
to its investment in DFM. Excluding this impairment, earnings per share from continuing operations increased by
9% to 877 cents per share, whilst headline earnings per share from continuing operations increased by 7% to
856 cents. After taking the impairment into account, earnings per share from continuing operations declined by
53% to 376 cents. The impairment has had no effect on headline earnings from continuing operations, which remain
unchanged at 856 cents per share.
INTERIM DIVIDEND
The Company has declared an interim dividend of 329 cents per share for the half year ended 31 March 2014, which
represents an increase of 6% compared to the 2013 interim dividend of 310 cents per share. Shareholders are
referred to the dividend announcement below for further details.
OUTLOOK
The Board remains confident that the group’s strategies are appropriate for the businesses and will ultimately
deliver the desired outcomes.
Trading conditions in the domestic market continue to be challenging, with ongoing volume pressures resulting from
continued constraints on consumer spending and rising inflation. This is exacerbated by a highly competitive
landscape with limited volume growth in many FMCG categories. Margin pressures should ease over the balance of the
year as pricing is adjusted to partly offset the higher input costs. However, this could negatively affect volumes.
The improvement in the performance of DFM remains a key priority for the group and the action plans being
implemented are aimed at reducing the rate of losses being sustained by the business over the balance of the
financial year. Exports and the remainder of the International businesses are expected to continue to deliver
strong growth, albeit at a slower pace given the recent strengthening of the Rand exchange rate.
For and on behalf of the Board
AC Parker PB Matlare
Chairman Chief Executive Officer
20 May 2014
DECLARATION OF INTERIM DIVIDEND NO 139
The Board has approved and declared an interim dividend of 329 cents per ordinary share (gross) in respect
of the six months ended 31 March 2014.
The dividend will be subject to the Dividends Tax that was introduced with effect from 1 April 2012. In
accordance with paragraphs 11.17 (a) (i) to (x) and 11.17 (c) of the JSE Listings Requirements the following
additional information is disclosed:
• The dividend has been declared out of income reserves;
• The local Dividends Tax rate is 15% (fifteen per centum);
• There are no Secondary Tax on Companies (STC) credits utilised;
• The gross local dividend amount is 329 cents per ordinary share for shareholders exempt from the Dividends Tax;
• The net local dividend amount is 279,65 cents per ordinary share for shareholders liable to pay the Dividends Tax;
• Tiger Brands has 191 896 268 ordinary shares in issue (which includes 10 326 758 treasury shares); and
• Tiger Brands Limited’s income tax reference number is 9325/110/71/7.
Shareholders are advised of the following dates in respect of the interim dividend:
Last day to trade cum the interim dividend Friday, 20 June 2014
Shares commence trading ex the interim dividend Monday, 23 June 2014
Record date to determine those shareholders entitled to the interim dividend Friday, 27 June 2014
Payment in respect of the interim dividend Monday, 30 June 2014
Share certificates may not be dematerialised or re-materialised between Monday, 23 June 2014 and Friday,
27 June 2014, both days inclusive.
By order of the Board
IWM Isdale
Secretary
Sandton
20 May 2014
Interim condensed consolidated income statement
Unaudited six Unaudited six
months ended months ended Year ended
31 March 31 March 30 September
2014 Change % 2013 2013
R’million Notes Restated*# Restated*
Turnover 14 926,9 11 13 443,2 27 003,5
Cost of sales (10 319,3) (13) (9 171,7) (18 565,7)
Gross profit 4 607,6 8 4 271,5 8 437,8
Sales and distribution expenses (1 753,1) (9) (1 609,0) (3 143,4)
Marketing expenses (377,7) (26) (298,8) (649,9)
Other operating expenses (762,5) 4 (794,0) (1 561,7)
Operating income before
abnormal items 2 1 714,3 9 1 569,7 3 082,8
Abnormal items 3 (835,7) 7,5 (2,4)
Operating income after 878,6 (44) 1 577,2 3 080,4
abnormal items
Net finance costs (206,3) (17) (176,2) (378,8)
Investment income 1,2 (88) 9,9 17,0
Income from associated companies 265,9 4 255,2 515,1
Profit before taxation 939,4 (44) 1 666,1 3 233,7
Taxation (412,4) (1) (409,7) (836,6)
Profit for the period from
continuing operations 527,0 (58) 1 256,4 2 397,1
Profit for the period from
discontinued operation 6 41,0 (29) 57,8 158,0
Profit for the period 568,0 (57) 1 314,2 2 555,1
Attributable to:
Owners of the parent 631,9 (52) 1 319,1 2 576,7
- Continuing operations 602,0 (53) 1 288,8 2 516,0
- Discontinued operation 29,9 (1) 30,3 60,7
Non-controlling interest (63,9) (4,9) (21,6)
- Continuing operations (75,0) (132) (32,4) (118,9)
- Discontinued operation 11,1 (60) 27,5 97,3
568,0 (57) 1 314,2 2 555,1
*The amounts have been restated due to the adoption of IAS 19R.
#The amounts have been restated as required by IFRS 5 with disclosure of a discontinued operation.
Interim condensed consolidated income statement (continued)
Unaudited six Unaudited six
months ended months ended Year ended
31 March 31 March 30 September
2014 Change % 2013 2013
R’million Restated*# Restated*
Basic earnings per share (cents) 395,0 (52) 826,2 1 612,9
- Continuing operations 376,3 (53) 807,2 1 574,9
- Discontinued operation 18,7 (2) 19,0 38,0
Diluted basic earnings per share (cents) 386,7 (52) 810,2 1 572,9
- Continuing operations 368,4 (54) 791,6 1 535,8
- Discontinued operation 18,3 (2) 18,6 37,1
Headline earnings per share (cents) 866,8 6 820,6 1 628,6
- Continuing operations 855,5 7 801,6 1 574,3
- Discontinued operation 11,3 (41) 19,0 54,3
Diluted headline earnings per share (cents) 848,7 6 804,7 1 588,1
- Continuing operations 837,6 7 786,1 1 535,2
- Discontinued operation 11,1 (40) 18,6 52,9
Excluding DFM impairment - continuing operations
Basic earnings per share (cents) 877,4 9 807,2 1 574,9
Diluted basic earnings per share (cents) 859,1 9 791,6 1 535,8
*The amounts have been restated due to the adoption of IAS 19R.
#The amounts have been restated as required by IFRS 5 with disclosure of a discontinued operation.
Statement of comprehensive income
Unaudited six Unaudited six
months ended months ended Year ended
31 March 31 March 30 September
2014 2013 2013
R’million Notes Restated* Restated*
Profit for the period 568,0 1 314,2 2 555,1
Other comprehensive income (26,2) 231,5 523,6
Net loss on hedge of net investment
in foreign operation(1) (9,9) (4,6) (40,1)
Foreign currency translation adjustments(1) 35,7 286,8 512,5
Net loss on cash flow hedges(1) (4,2) (75,5) (57,3)
Net (loss)/gain on available for sale
financial assets(1) (53,0) (0,1) 53,0
Actuarial gain released in terms of IAS 19R 7 - 21,6 43,1
Tax effect 5,2 3,3 12,4
Total comprehensive income for the period 541,8 1 545,7 3 078,7
Attributable to:
Owners of the parent 574,9 1 550,6 2 974,3
Non-controlling interest (33,1) (4,9) 104,4
541,8 1 545,7 3 078,7
(1) Items that may subsequently be reclassified to profit or loss. During the current period,
R94,3 million of the foreign currency translation reserve, relating to Dangote Agrosacks, was
reclassified to profit or loss.
*The amounts have been restated due to the adoption of IAS 19R.
Interim condensed consolidated statement of financial position
Unaudited Unaudited
as at as at As at
31 March 31 March 30 September
2014 2013 2013
R’million Restated* Restated*
ASSETS
Non-current assets 13 852,4 13 950,2 14 510,1
Property, plant and equipment 5 736,6 5 936,8 5 498,7
Goodwill 2 440,6 3 052,6 3 173,2
Intangible assets 2 151,7 1 800,5 2 251,4
Investments 3 322,3 3 079,2 3 413,3
Deferred taxation asset 201,2 81,1 173,5
Current assets 10 070,7 10 015,0 9 485,5
Inventories 4 882,8 4 618,4 4 652,7
Trade and other receivables 4 502,9 4 808,0 4 199,9
Cash and cash equivalents 685,0 588,6 632,9
Assets classified as held-for-sale - - 1 280,7
TOTAL ASSETS 23 923,1 23 965,2 25 276,3
EQUITY AND LIABILITIES
Issued capital and reserves 12 302,9 11 849,3 12 787,1
Non-controlling interests 825,8 963,2 1 028,4
TOTAL EQUITY 13 128,7 12 812,5 13 815,5
Non-current liabilities 2 048,6 2 673,4 2 432,4
Deferred taxation liability 409,4 361,7 398,8
Provision for post-retirement
medical aid 590,4 642,3 580,9
Long-term borrowings 1 048,8 1 669,4 1 452,7
Current liabilities 8 745,8 8 479,3 8 329,8
Trade and other payables 4 145,7 4 292,5 3 987,6
Provisions 586,9 540,5 560,5
Taxation 47,2 120,0 131,5
Short-term borrowings 3 966,0 3 526,3 3 650,2
Liabilities directly associated
with assets classified as - - 698,6
held-for-sale
TOTAL EQUITY AND LIABILITIES 23 923,1 23 965,2 25 276,3
Net debt 4 329,8 4 607,1 4 470,0
*The amounts have been restated due to the adoption of IAS 19R.
Interim condensed consolidated statement of cash flows
Unaudited six Unaudited six
months ended months ended Year ended
31 March 31 March 30 September
R’million 2014 2013 2013
Cash operating profit 2 149,8 2 164,9 4 311,3
Working capital changes (427,4) (339,9) (337,2)
Cash generated from operations 1 722,4 1 825,0 3 974,1
Finance cost net of dividends received (91,3) (80,8) (108,6)
Taxation paid (487,7) (550,3) (986,2)
Cash available from operations 1 143,4 1 193,9 2 879,3
Dividends paid (907,8) (910,8) (1 426,1)
Net cash inflow from operating activities 235,6 283,1 1 453,2
Purchase of property, plant and equipment (481,8) (288,7) (727,6)
Proceeds from disposal of property, plant, equipment
and intangible assets 33,7 12,4 31,1
Disposals/(acquisitions) of businesses 496,4 (1 868,4) (2 586,4)
Proceeds on insurance claim 28,7
Other (2,2) (0,5) 1,1
Net cash inflow/(outflow) from investing activities 74,8 (2 145,2) (3 281,8)
Proceeds from issue of share capital 18,4 18,6 17,8
Long- and short-term borrowings (repaid)/raised (530,3) 934,5 407,7
Acquisition of 2.31% non-controlling interest - DFM (74,1) - -
Net cash (outflow)/inflow from financing activities (586,0) 953,1 425,5
Net decrease in cash and cash equivalents (275,6) (909,0) (1 403,1)
Cash and cash equivalents transferred to assets
held-for-sale - - (20,4)
Effect of exchange rate changes 21,3 19,4 64,6
Cash and cash equivalents at the beginning
of the period (2 093,9) (735,0) (735,0)
Cash and cash equivalents at the end of the period (2 348,2) (1 624,6) (2 093,9)
Cash resources 685,0 588,6 632,9
Short-term borrowings regarded as cash and cash
equivalents (3 033,2) (2 213,2) (2 726,8)
(2 348,2) (1 624,6) (2 093,9)
Other salient features
Unaudited Unaudited
six months six months Year ended
31 March 31 March 30 September
R’million 2014 2013 2013
Capital commitments 442,8 1 077,9 780,3
- contracted 197,2 168,2 372,2
- approved 245,6 909,7 408,1
At 31 March 2014, the total capital commitments proposed but not yet approved amounted to R782,5 million. Capital
commitments will be funded from normal operating cash flows and the utilisation of existing borrowing facilities.
Capital expenditure 481,8 288,7 727,6
- replacement 265,7 197,5 540,3
- expansion 216,1 91,2 187,3
Contingent liabilities
- guarantees and contingent liabilities 131,1 20,0 78,8
Interim condensed consolidated segmental information
Unaudited six Unaudited six
months ended months ended Year ended
31 March 31 March 30 September
2014 Change % 2013 2013
R’million Restated*# Restated*
Turnover
Domestic Operations 11 204,9 8 10 331,9 20 250,7
Grains 5 338,7 9 4 917,9 10 052,7
Milling and Baking 3 862,3 12 3 463,4 7 243,3
Other Grains** 1 476,4 2 1 454,5 2 809,4
Consumer Brands 5 866,2 8 5 414,0 10 198,9
Groceries** 2 039,5 18 1 726,9 3 238,6
Snacks & Treats 1 024,2 8 952,8 1 924,0
Beverages 618,3 (2) 632,6 1 020,3
Value Added Meat Products** 942,6 5 901,2 1 736,3
Out of Home 206,7 2 203,5 402,7
Home, Personal care and Baby 1 034,9 4 997,0 1 877,0
Domestic intergroup sales - - - (0,9)
Exports and international 2 258,3 24 1 823,3 3 944,0
Exports 897,6 23 727,1 1 521,7
International operations 744,0 25 595,0 1 239,6
Deciduous fruit 679,9 21 560,9 1 324,5
Intergroup sales (63,2) (6) (59,7) (141,8)
Nigeria 1 463,7 14 1 288,0 2 808,8
Total turnover - Continuing operations 14 926,9 11 13 443,2 27 003,5
Operating income before abnormal items
Domestic operations 1 560,3 6 1 477,6 2 892,0
Grains 832,1 10 756,9 1 689,7
Milling and Baking 689,0 10 623,9 1 399,9
Other Grains** 143,1 8 133,0 289,8
Consumer Brands 739,3 (10) 824,1 1 345,9
Groceries** 151,2 (33) 225,0 295,1
Snacks & Treats 175,2 11 157,7 305,0
Beverages 84,0 (5) 88,1 106,4
Value Added Meat Products** 62,3 (3) 64,2 119,7
Out of Home 42,0 6 39,7 80,4
Home, Personal care and Baby 224,6 (10) 249,4 439,3
Other (11,1) 89 (103,4) (143,6)
Exports and international 335,0 26 265,6 574,8
Exports 198,4 16 171,6 366,4
International operations 105,7 42 74,6 166,3
Deciduous fruit 30,9 59 19,4 42,1
Nigeria (181,0) (4) (173,5) (384,0)
TOTAL OPERATING INCOME BEFORE ABNORNAL ITEMS
- Continuing operations 1 714,3 9 1 569,7 3 082,8
*The amounts have been restated due to the adoption of IAS 19R.
#The amounts have been restated as required by IFRS 5 with disclosure of a discontinued operation.
** Segmental reporting has been revised during the current year, with Pasta and Canned meats being removed from the Groceries division
and realigned to Other Grains and Value Added Meat Products respectively. The comparative disclosures have been restated accordingly.
Interim condensed consolidated statement of changes in equity
Share Shares held by
capital Non- subsidiary and
and distributable Accumulated empowerment
R’million premium reserves profits entities
Balance at 1 October 2012 as
originally reported 94,5 1 408,9 12 142,5 (2 675,6)
Restatement - - (129,5) -
Balance at 1 October 2012 - Restated 94,5 1 408,9 12 013,0 (2 675,6)
Profit for the period - - 1 319,1 -
Other comprehensive income - 216,0 15,5 -
94,5 1 624,9 13 347,6 (2 675,6)
Issue of share capital and premium 18,6 - - -
Recognition of minority interests in DFM - - - -
Transfers between reserves - 137,3 (137,3) -
Share-based payment reserve - - - -
Dividends on ordinary shares (net of
dividend on treasury shares) - - (908,8) -
Sale of shares - - - 1,1
Balance at 31 March 2013 - Restated 113,1 1 762,2 12 301,5 (2 674,5)
Profit for the period - - 1 257,6 -
Other comprehensive income - 150,6 15,5 -
113,1 1 912,8 13 574,6 (2 674,5)
Issue of share capital and premium 4,2 - - -
Recognition of minority interests in DFM - - - -
Transfers between reserves - 77,0 (77,0) -
Share-based payment reserve - - - -
Dividends on ordinary shares (net of
dividend on treasury shares) - - (507,4) -
Sale of shares - - - 0,5
Balance at 30 September 2013 - Restated 117,3 1 989,8 12 990,2 (2 674,0)
Profit for the period - - 631,9 -
Other comprehensive income - (57,0) - -
117,3 1 932,8 13 622,1 (2 674,0)
Issue of share capital and premium 16,9 - - -
Acquisition of non-controlling interest - DFM - (49,7) - -
Disposal of Dangote Agrosacks Limited - - - -
Distribution to Oceana Empowerment Trust
Beneficiaries - (143,4) - -
Transfers between reserves - 147,1 (147,1) -
Share-based payment reserve - - - -
Dividends on ordinary shares (net of
dividend on treasury shares) - - (907,8) -
Sale of shares - - - 1,3
Balance at 31 March 2014 134,2 1 886,8 12 567,2 (2 672,7)
Interim condensed consolidated statement of changes in equity continued
Total attributable
Share-based to owners of the Non-controlling
R’million payment reserve parent interests Total equity
Balance at 1 October 2012 as
originally reported 332,5 11 302,8 392,7 11 695,5
Restatement - (129,5) - (129,5)
Balance at 1 October 2012 - Restated 332,5 11 173,3 392,7 11 566,0
Profit for the period - 1 319,1 (4,9) 1 314,2
Other comprehensive income - 231,5 - 231,5
332,5 12 723,9 387,8 13 111,7
Issue of share capital and premium - 18,6 - 18,6
Recognition of minority interests in DFM - - 577,4 577,4
Transfers between reserves - - - -
Share-based payment reserve 14,5 14,5 - 14,5
Dividends on ordinary shares (net of
dividend on treasury shares) - (908,8) (2,0) (910,8)
Sale of shares - 1,1 - 1,1
Balance at 31 March 2013 - Restated 347,0 11 849,3 963,2 12 812,5
Profit for the period - 1 257,6 (16,7) 1 240,9
Other comprehensive income - 166,1 126,0 292,1
347,0 13 273,0 1 072,5 14 345,5
Issue of share capital and premium - 4,2 - 4,2
Recognition of minority interests in DFM - - (36,2) (36,2)
Transfers between reserves - - - -
Share-based payment reserve 16,8 16,8 - 16,8
Dividends on ordinary shares (net of
dividend on treasury shares) - (507,4) (7,9) (515,3)
Sale of shares - 0,5 - 0,5
Balance at 30 September 2013 - Restated 363,8 12 787,1 1 028,4 13 815,5
Profit for the period - 631,9 (63,9) 568,0
Other comprehensive income - (57,0) 30,8 (26,2)
363,8 13 362,0 995,3 14 357,3
Issue of share capital and premium - 16,9 - 16,9
Acquisition of non-controlling interest - DFM - (49,7) (24,4) (74,1)
Disposal of Dangote Agrosacks Limited - - (145,1) (145,1)
Distribution to Oceana Empowerment Trust
Beneficiaries - (143,4) - (143,4)
Transfers between reserves - - - -
Share-based payment reserve 23,6 23,6 - 23,6
Dividends on ordinary shares (net of
dividend on treasury shares) - (907,8) - (907,8)
Sale of shares - 1,3 - 1,3
Balance at 31 March 2014 387,4 12 302,9 825,8 13 128,7
Notes
1. Basis of preparation and changes to the Group’s accounting policies
The preparation of these results has been supervised by O Ighodaro, Chief Financial Officer of Tiger Brands Limited.
The condensed group interim consolidated financial statements for the six months ended 31 March 2014 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.
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with
those applied in preparation of the group’s annual consolidated financial statements for the year ended 30 September 2013,
except for the adoption of IAS 19R Employee Benefits, effective 1 October 2013, where the effect of these amendments are
explained in Note 7. In addition, IFRS 7 amendments, IFRS 10, IFRS 11 and IFRS 12 have been adopted with effect from
1 October 2013, however, they do not impact the annual consolidated financial statements or the interim condensed consolidated
financial statements of the group. IFRS 13 has been adopted with effect from 1 October 2013 in terms of which the additional
disclosures are reflected in Note 8.
Unaudited Unaudited
six months six months Year ended
31 March 31 March 30 September
R’million 2014 2013 2013
2. Operating income before abnormal items
Depreciation (included in cost of sales and other operating expenses) (332,8) (308,4) (640,1)
Amortisation (23,6) (23,0) (47,4)
IFRS 2 (included in other operating expenses)
- Equity settled (23,5) (19,9) (36,2)
- Cash settled 26,6 (73,9) (98,0)
3. Abnormal items
Acquisition costs (12,3) (8,0) (15,0)
Profit on disposal of property, plant and equipment and intangible assets 14,8 11,1 11,1
Impairment of intangible assets (848,7) - (2,9)
Insurance claim income 28,7 - -
Other (18,2) 4,4 4,4
Total (835,7) 7,5 (2,4)
4. Impairment
Goodwill and intangible assets are tested for impairment annually (as at 30 September) and when circumstances indicate the carrying
value may be impaired. The Group’s impairment test for goodwill and intangible assets with indefinite lives is 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 2013.
5. Reconciliation between profit for the period and headline earnings
Continuing operations
Profit for the period attributable to owners of the parent 602,0 1,288,8 2,516,0
Profit on disposal of property, plant, equipment and intangible assets (14,2) (9,0) (3,0)
Impairment of intangible assets 801,7 - 2,9
Insurance claim income (20,7) - -
Headline earnings adjustment - Associates
- Profit on disposal of property, plant, equipment and intangible assets (0,1) - (0,9)
1 368,7 1 279,8 2 515,0
Tax effect of headline earnings adjustments 16,9 2,0 2,3
Attributable to non-controlling interests 20,9 - (2,9)
Discontinued operation
Profit for the period attributable to owners of the parent 29,9 30,3 60,7
(Profit)/loss on remeasurement to fair value of transfer of net assets held-for-sale (11,8) - 16,3
Loss on disposal of property, plant and equipment - - 9,7
18,1 30,3 86,7
Attributable to non-controlling interests (6,8) - (15,3)
6. Analysis of profit from discontinued operation
Profit for the period from discontinued operation
(attributable to owners of the Company)
Turnover 186,9 540,4 1,087,8
Expenses (156,1) (423,8) (890,9)
Operating income before abnormal items 30,8 116,6 196,9
Profit/(loss) on remeasurement to fair value on transfer of net assets to held-for-sale 18,6 - (25,8)
Operating income after abnormal items 49,4 116,6 171,1
Finance costs (5,0) (32,4) (47,6)
Profit before taxation 44,4 84,2 123,5
Taxation (3,4) (26,4) 34,5
Profit for the period from discontinued operation 41,0 57,8 158,0
Attributable to non-controlling interests (11,1) (27,5) (97,3)
Attributable to owners of parent 29,9 30,3 60,7
Cash flows from discontinued operation
Net cash (outflows)/inflows from operating activities (23,9) 145,1 266,1
Net cash inflows/(outflows) from investing activities 97,0 130,3 (178,6)
Net cash outflows from financing activites (72,2) (41,8) (227,8)
Net cash inflows/(outflows) 0,9 233,6 (140,3)
7. Employee benefits - Impact of transition to IAS 19R
The Group adopted the revised IAS 19 Employee benefits standard on 1 October 2013. This included changes to accounting principles in
respect of defined benefit plans and the post-retirement medical aid liability. The amendment eliminates the option of the corridor
approach and all the actuarial gains and losses are now recognised immediately in other comprehensive income. The full net liability/asset
is recorded in the statement of financial position while the expected interest income on assets is calculated using the same discount rate
as for calculating the present value of the obligation. The changes in fair value of the net obligation are recorded in other comprehensive
income where those were included in operating expenses previously. The amendments were applied retrospectively to both March 2013 and
September 2013. The impact of the revised standard on the Group is presented in the table below.
Unaudited
six months Year ended
31 March 30 September
R’million 2013 2013
Statement of Financial Position
Decrease in opening retained income 129,5 129,5
Increase in provision for post-retirement medical aid (162,6) (148,3)
(Increase)/decrease in provision for defined benefit fund (0,5) 0,5
Increase in trade and other receivables 10,0 21,5
Increase in deferred tax asset 42,8 35,3
19,2 38,5
Profit or loss
Decrease in operating expenses (5,1) (10,4)
Increase in tax expense 1,4 2,9
(3,7) (7,5)
Other Comprehensive Income (OCI)
Actuarial movements in OCI - PRMA (8,5) (17,0)
Actuarial movements in OCI - Defined benefit fund (13,1) (26,1)
Tax on actuarial movements in OCI 6,1 12,1
(15,5) (31,0)
Net movement in total comprehensive income (19,2) (38,5)
There was no material impact on the Group’s interim consolidated statement of cash flows or basic and diluted EPS or HEPS.
8. Fair value of financial instruments
The carrying amounts of all financial instruments approximate their fair value.The estimated net fair values as at the reporting date,
have been determined using available market information and appropriate valuation methodologies.
The table below analyses financial instruments carried at fair valuation method.
31 March 2014 30 September 2013
R’million Total Level 1 Level 2 Total Level 1 Level 2
Assets measured at fair value
Other investments 364,6 354,4 10,2 420,3 411,6 8,7
Foreign exchange contracts 42,8 - 42,8 91,6 - 91,6
- hedged
Liabilities measured at fair value
Foreign exchange contracts 294,7 - 294,7 568,3 - 568,3
- hedged
Independent non-executive directors
A C Parker (Chairman), B L Sibiya (Deputy Chairman), S L Botha, R M W Dunne (British),
K D K Mokhele, M P Nyama, R D Nisbet, M Makanjee, M J Bowman
Executive directors
P B Matlare (Chief Executive Officer), C F H Vaux,
O Ighodaro (Chief Financial Officer) (Nigerian)
Company Secretary
I W M Isdale
Sponsor
JP Morgan Equities South Africa (Pty) Ltd
1 Fricker Road, Corner Hurlingham Road, Illovo, 2196, 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
Tiger Brands Limited
Telephone: 011 840 4000
Facsimile: 011 514 0477
Physical address:
Tiger Brands Limited, 3010 William Nicol Drive, Bryanston
Postal address:
PO Box 78056, Sandton, 2146, South Africa
Website: www.tigerbrands.com
21 May 2014
Date: 21/05/2014 07:30:00 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.