Wrap Text
Audited results and dividend declaration for the year ended 30 September 2016
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 2016
Key performance indicators
- Resilient brands drive a solid underlying performance in a challenging environment
- Strong domestic volume growth of 2% drives group turnover* up 11% R31,7 billion
- Group operating income* (before IFRS 2) up 5% to R4,2 billion
- Total HEPS up 19% to 2 127 cents boosted by disposal of TBCG
- Final dividend of 702 cents per share, with total dividend up 12% to 1 065 cents per share
- HEPS* up 2% to 2 130 cents
* From continuing operations.
Commentary
Overview
Despite a challenging operating environment, our resilient brands drove strong volume growth, particularly in the
domestic market with total group turnover from continuing operations increasing by 11% to R31,7 billion (2015: R28,7
billion), while operating income before IFRS 2 charges increased by 5% to R4,2 billion (2015: R4,1 billion).
The year under review was characterised by high inflation in raw material input costs, primarily due to the prolonged
drought and significant currency volatility. The impact was felt across the Domestic portfolio, most notably in the
Grains and Groceries divisions. Despite a marginal decline in the Grains division's operating income, driven primarily by
drought-related cost push in Maize and Sorghum, the performance of the balance of the Domestic portfolio reflects the
strength of our brands, with particularly strong performances from Groceries, Beverages and Home Care. International
(including Exports) reported a 19% increase in operating income, which included a strong performance from Deciduous Fruit:
Langeberg and Ashton Foods (LAF), a recovery at Haco Tiger Brands (Haco) and another exceptional set of results from
Chococam. This performance was partially offset by lower profitability in Exports due to the challenging economic environment
and foreign exchange liquidity issues in key markets including Zimbabwe, Nigeria and Mozambique. The overall operating
margin before IFRS 2 charges declined to 13,4% from 14,1% influenced by responsible pricing decisions to protect our
brand franchises.
Income from associates increased by 43% to R861 million driven primarily by Oceana Group and Chilean-based Empresas
Carozzí. The contribution from associates includes capital profits of R117 million (2015: R3 million) arising from certain
asset disposals.
The 13% reduction in net financing costs resulted from a net foreign exchange gain of R121 million (2015: R21 million)
including a once-off foreign exchange gain of R153 million, following the settlement of a naira denominated loan which
had been assumed as part of the exit from TBCG, partly offset by the impact of higher domestic interest rates in the
current year.
Profit before tax from continuing operations increased by 10% to R4,5 billion (2015: R4,1 billion), after accounting
for R335 million in impairment charges. These impairments related primarily to goodwill and other intangible assets in
the Personal Care business.
A higher effective tax rate (before abnormal items, impairments and associate income) in the current year of 30,9%
(2015: 25,6%) resulted in attributable earnings from continuing operations increasing by 4% to R3,3 billion.
The group's interest in Tiger Branded Consumer Goods plc (TBCG), formerly Dangote Flour Mills, was disposed of with
effect from 25 February 2016. Consequently, TBCG has been treated as a discontinued operation in these results, with the
comparative information restated accordingly.
Earnings per share from continuing operations increased 4% to 2 007 cents (2015: 1 930 cents), whilst headline
earnings per share from continuing operations was up 2% to 2 130 cents (2015: 2 091 cents).
Total earnings per share, including discontinued operations (TBCG), increased 90% to 2 034 cents (2015: 1 068 cents).
Similarly, total headline earnings per share (including discontinued operations (TBCG)), increased 19% to 2 127 cents
(2015: 1 786 cents).
Operating performance
Domestic operations
Turnover rose by 11%, driven by volume growth of 2% and price inflation of 9%. However, operating income grew at a
slower rate of 3% to R3,7 billion. Strong growth in operating income was recorded by Groceries, Beverages and Home Care,
with a marginal decline in the Grains performance driven largely by a significant reduction in Maize profitability.
Ongoing cost management programmes have proven successful, with savings of R380 million achieved during the year. However,
these savings coupled with higher realisations, were insufficient to counter the inflationary pressures experienced in soft
commodities. Consequently, the overall Domestic operating margin declined from 15,2% to 14,0%.
Grains
Turnover increased 13% to R12,8 billion (2015: R11,4 billion) driven entirely by inflation. Despite growth in all
other Grains categories, overall volumes were flat due to significant declines in Maize. Operating income reduced by 3% to
R2,0 billion (2015: R2,1 billion). The operating margin, which declined by 2,5 percentage points to 15,6%, was adversely
affected by the high level of input cost inflation.
Turnover in Milling and Baking increased by 13% to R9,2 billion (2015: R8,2 billion), driven by high levels of
inflation, particularly in Maize and Wheat. A disappointing performance from Maize and Sorghum resulted in operating income
declining by 5% to R1,6 billion (2015: R1,7 billion). This contributed to a lower operating margin of 17,3% compared with
the prior year of 20,6%. The wheat-to-bread value chain performed credibly in an increasingly competitive environment in
both baking and wheat milling.
Other Grains delivered a strong result attributable to good performances from the Pasta and Oats categories. Turnover
was up 13% to R3,6 billion (2015: R3,2 billion) and operating income of R406 million (2015: R380 million) was 7% higher.
During the year, the Fatti's & Moni's brand was expanded into the fast-growing convenience segment with the launch of
instant noodles and early indications are encouraging. Jungle's performance benefited from innovation, such as the
single-serve Jungle cups that leverage on the trend of convenience and breakfast-on-the-go.
Consumer Brands - Food
Turnover increased 9% to R11,0 billion (2015: R10,1 billion) with a similar increase in operating profit to R1,2
billion (2015: R1,1 billion). The operating margin was maintained at 10,8% with volumes increasing by 3%.
Groceries continues its recovery and produced an improved performance. Turnover rose 10% to R4,7 billion (2015: R4,3
billion) whilst operating income increased by 13% to R466 million (2015: R411 million). As a result, the operating margin
improved from 9,6% to 9,9%. The division's supply chain continues to focus on achieving manufacturing excellence. The
mayonnaise operation, which is now located in Boksburg (Gauteng), is performing to expectation after experiencing some
initial challenges. Despite difficulties presented by the ongoing drought, the adverse impact on raw material availability
was kept to a minimum. Although this was well managed, the effect of the drought and foreign currency volatility raised
raw material and packaging costs significantly. An appropriate pricing strategy was implemented in a trading
environment marked by intense competition and constrained consumer spending.
The performance of Snacks & Treats recovered in the second half as technical challenges in the Gums and Jellies plant
were resolved. Turnover grew by 6% to R2,3 billion (2015: R2,1 billion), reflecting small volume share gains in a
contracting market. Operating income of R316 million was maintained in line with the previous year, despite exceptional input
cost increases in some major ingredients. This resulted in a decline in the operating margin from 14,7% to 13,9%. The
business made further progress in streamlining its portfolio by eliminating non-value-adding product lines. The category
optimisation process that started this year will pave the way for improved levels of innovation in 2017.
Beverages recorded robust volume growth for the year, driven by focused investment in its core brands. Both turnover
and operating income grew by 14% to R1,3 billion (2015: R1,2 billion) and R157 million (2015: R138 million), respectively.
Despite significant pressure on input costs, the operating margin was maintained at 11,8% through various cost-saving
initiatives and product mix management.
The Value Added Meat Products (VAMP) business benefited from category growth, particularly the polony segment.
Turnover was up 6% to R2,2 billion (2015: R2,1 billion) and operating income rose by 8% to R158 million (2015: R146 million),
despite significant increases in pork prices in the second half. The business achieved an operating margin of 7,1%.
During the year, the business of Hercules Cold Storage Proprietary Limited was acquired as a going concern. Its core business
is the manufacturing and distribution of processed meats, focused on the economy segment. The facility will be
converted into a Halaal-certified plant, providing access to identified new channels, including the independently owned
wholesale channel.
Home, Personal Care and Baby (HPCB)
HPCB's strong performance was driven by the Home Care category, and more specifically Pest. Overall, turnover
increased 13% to R2,4 billion (2015: R2,1 billion), including volume growth of 6%. Operating income increased 20% to R534
million (2015: R444 million), whilst the total operating margin increased from 20,7% to 21,9%.
The Home Care category produced an excellent performance with turnover growth of 25%. Consumer-relevant innovation and
excellent in-store execution underpinned a solid performance from the home enhancement segment. In the pest segment,
significant share gains, as well as innovation into new segments, supported a strong performance. Focused customer and
marketing activities contributed to good growth in the sanitation segment, particularly the Jeyes brand.
Growth in the Personal Care category slowed, reflecting the pressure on consumer spending. This was exacerbated by
competitors investing aggressively in pricing strategies and brand support. The business countered these challenges, to
some extent, by focusing on innovation with strong performances from core brands in the body care segment such as Ingram's,
Dolly Varden and Skin Clinic. Turnover increased 8% to R682 million (2015: R631 million) whilst operating income was up
3% to R134 million (2015: R130 million). The overall operating margin declined from 20,6% to 19,7%.
Baby Care faced a difficult year as economic conditions affected homogenised baby food consumption, and consumers
shifted from branded baby food to more affordable home cooking and general food brands. Turnover grew 7% to R862 million
(2015: R803 million), driven primarily by baby nutrition. Operating income declined 1% to R211 million (2015: R214 million)
with the operating margin at 24,5%, down from 26,7% the previous year. Since its introduction in July 2015, the new
pouch format has grown exponentially, with Purity's share of this format reaching 70%.
International (including Exports)
Total turnover for the International businesses (including Exports) rose 7% to R5,4 billion (2015: R5,0 billion),
whilst operating income increased by 19% to R547 million (2015: R462 million). The operating margin widened from 9,2% to
10,2%. Overall volumes decreased by 5% as a result of the significantly lower volumes recorded by the Exports division.
Exports' performance was impacted by currency devaluations and foreign exchange shortages in major export regions including
Nigeria, Mozambique, Zimbabwe and Zambia. This in turn affected the ability of key customers to stay within their
credit limits and replenish stocks. In addition, import permit regulations imposed in Zimbabwe significantly affected
performance in the fourth quarter.
Central Africa: Chococam recorded a seventh consecutive year of turnover growth despite difficult economic conditions.
Turnover in rand terms grew 25% to R884 million (2015: R707 million) and operating income increased by 30% to R150
million (2015: R116 million), with the operating margin at 17,0% compared to 16,4% in 2015. The business benefited from
strong volume growth, particularly in the chocolate bar and spreads categories. Other key drivers of the performance include
the continued investment in brands through traditional and digital media support, trade and consumer activations and
improved coverage of informal retail. Another important growth vector is innovation, which contributed 7,2% to turnover.
East Africa: Turnover increased 26% to R960 million (2015: R763 million), whilst operating income of R51 million was
achieved compared with a loss of R47 million in the previous year. There was a pleasing recovery in Haco's volumes
despite tough regional economic conditions, including foreign currency shortages in Ethiopia, foreign exchange volatility
in Uganda and Rwanda, and civil unrest in Burundi.
EATBI's performance was disappointing relative to the previous year with a particularly challenging second half. The
performance was affected by severe drought in the eastern and northern parts of the country, as well as ongoing protest
action and unrest which affected trading. In June 2016, Tiger Brands announced its decision to dispose of its 51%
shareholding in this company to its existing Ethiopian partner. Given the uncertainty of the timing of completing the
transaction, this business has not been reflected as an asset held-for-sale at 30 September 2016. Both parties remain
committed to the sale and will continue to work to fulfil all remaining suspensive conditions.
West Africa: Deli Foods, which is based in Nigeria, continues to be affected by the devaluation of the local currency
and its impact on the cost of wheat imports and other key raw materials. In addition, ongoing power outages and the
introduction of value-added tax on biscuits have had a further adverse effect on the business. Turnover increased by 16%
to R477 million (2015: R412 million). The inability to recover the significant cost increases in key raw materials,
resulted in trading losses increasing by 27% to R49 million (2015: R38 million).
Deciduous Fruit (LAF) increased turnover by 17% to R1,7 billion (2015: R1,4 billion) whilst operating income rose by
59% to R148 million (2015: R93 million). This resulted in an increase in the operating margin from 6,5% to 8,8%. The
performance was positively influenced by the weak rand, volume growth into the Far East and Australasia, the benefit of
improved yields, as well as effective management of costs.
Cash flow and capital expenditure
Cash generated from operations increased 18% to R4,2 billion (2015: R3,6 billion). The improvement was primarily due
to the disposal of TBCG in February 2016. Capital expenditure incurred during the year amounted to R945 million (2015:
R882 million). Net debt for the group was reduced by R1,8 billion, also benefiting largely from the disposal of TBCG.
Final dividend
The company has declared a final dividend of 702 cents per share (2015: 611 cents) for the year ended 30 September
2016. This, together with the interim dividend of 363 cents per share, brings the total dividend for the year to 1 065
cents. This is an increase of 12% on last year's total dividend of 950 cents. Shareholders are referred to the dividend
announcement below for further details.
Outlook
The difficult trading environment is expected to persist with inflation levels remaining high. The anticipated benefit
of lower soft commodity prices is only likely to be felt in the latter part of the ensuing financial year.
Given the solid performance delivered in 2016, the business is well positioned to counter the potential headwinds. The
focus will be on optimising margins without sacrificing market share. Our leading positions will be supported with
accretive innovation, whilst sustaining the strength of our brands through targeted investment. As input cost inflation is
expected to persist, cost-saving initiatives will receive renewed and more assertive focus to drive profitability. The
creation of a high-performance culture will underpin our efforts.
Strategic review
A strategic review of the business is well advanced and aims to:
- Rejuvenate the domestic business to deliver sustainable profitable growth
- Establish a strong and profitable growth trend in the rest of Africa
- Fundamentally restructure and re-engineer the business to achieve a competitive cost base and provide savings for
reinvestment
- Create a competitive organisational structure fit for growth over the medium and long term.
Many opportunities to realise short-term improvements have been identified and these will be implemented. We are also
taking a longer-term view to capitalise on the group's inherent strengths in the core South African market and take
advantage of additional opportunities on the rest of the continent. We will detail our plans for sustainable growth,
supported by key metrics and clear targets during the course of the ensuing financial year.
Board composition
As part of our policy to continually review the composition of the board of Tiger Brands, a number of changes have
been made. Shareholders are referred to the accompanying SENS announcement, which can be accessed on the company's website.
By order of the board
AC Parker LC Mac Dougall
Chairman Chief Executive Officer
Bryanston
Date of release 23 November 2016
Declaration of final dividend
The board has approved and declared a final dividend of 702 cents per ordinary share (gross) in respect of the year
ended 30 September 2016.
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);
- The gross local dividend amount is 702 cents per ordinary share for shareholders exempt from the Dividends Tax;
- The net local dividend amount is 596,70 cents per ordinary share for shareholders liable to pay the Dividends Tax;
- Tiger Brands has 192 069 868 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 final dividend:
2017
Last day to trade cum Tuesday, 10 January
the final dividend
Shares commence Wednesday, 11 January
trading ex the final
dividend
Record date to determine those shareholders entitled to the final dividend Friday, 13 January
Payment in respect of the final dividend Monday, 16 January
Share certificates may not be dematerialised or re-materialised between Wednesday, 11 January 2017 and Friday, 13
January 2017, both days inclusive.
By order of the board
T Naidoo
Secretary
Sandton
Date of release 23 November 2016
Condensed consolidated income statement
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million Notes 2016 Restated*#^
Turnover 31 697,5 28 660,0
Cost of sales (21 498,6) (18 980,5)
Gross profit 10 198,9 9 679,5
Sales and distribution expenses (3 612,1) (3 425,7)
Marketing expenses (866,0) (809,5)
Other operating expenses (1 566,7) (1 418,6)
Operating income before impairments and abnormal items 2 4 154,1 4 025,7
Impairments 3 (334,8) (319,8)
Abnormal items 4 11,0 (18,7)
Operating income after impairments and abnormal items 3 830,3 3 687,2
Net finance costs and investment income 5 (176,3) (203,2)
Income from associated companies 860,7 602,8
Profit before taxation 4 514,7 4 086,8
Taxation 6 (1 220,6) (977,3)
Profit for the year from continuing operations 3 294,1 3 109,5
Discontinued operation
Profit/(loss) for the year from discontinued operation 7 27,6 (2 167,5)
Profit for the year 3 321,7 942,0
Attributable to:
Owners of the parent 3 305,6 1 727,1
- Continuing operations 3 261,2 3 121,4
- Discontinued operation 44,4 (1 394,3)
Non-controlling interests 16,1 (785,1)
- Continuing operations 32,9 (11,9)
- Discontinued operation (16,8) (773,2)
3 321,7 942,0
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated#
Basic earnings per ordinary share (cents) 2 034,4 1 068,1
- Continuing operations 2 007,1 1 930,4
- Discontinued operation 27,3 (862,3)
Diluted basic earnings per ordinary share (cents) 1 991,5 1 050,9
- Continuing operations 1 964,8 1 899,3
- Discontinued operation 26,7 (848,4)
Headline earnings per ordinary share (cents) 2 127,1 1 785,5
- Continuing operations 2 130,3 2 091,0
- Discontinued operation (3,2) (305,5)
Diluted headline earnings per ordinary share (cents) 2 082,2 1 756,7
- Continuing operations 2 085,3 2 057,3
- Discontinued operation (3,1) (300,6)
* The comparatives have been restated for the retrospective reclassification relating to the treatment of
foreign exchange profits and losses on foreign cash balances and loans of a funding nature previously
included in operating income and now reclassified to net finance costs. Refer note 9 for further details.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG)
as a discontinued operation.
^ Historically, impairments have been disclosed as part of total abnormal items. Impairments have now been
disclosed on the face of the income statement for better clarity.
Condensed consolidated statement of comprehensive income
Audited Audited
year ended year ended
30 September 30 September
R'million 2016 2015
Profit for the year 3 321,7 942,0
Other comprehensive (loss)/income, net of tax (86,9) 299,2
Net (loss)/gain on hedge of net investment in foreign operation1 (42,9) 7,6
Foreign currency translation (FCTR) adjustments1,3 (147,7) 90,5
Share of associates other comprehensive income and FCTR1 127,7 281,7
Net (loss)/gain on cash flow hedges1 (45,6) 7,0
Net gain/(loss) on available for sale financial assets1,3 15,7 (91,3)
Remeasurement raised in terms of IAS 19R2 (1,2) (14,5)
Tax effect 7,1 18,2
Total comprehensive income for the year, net of tax 3 234,8 1 241,2
Attributable to:
Owners of the parent 3 252,4 1 995,1
Non-controlling interests (17,6) (753,9)
3 234,8 1 241,2
1 Items that may be subsequently reclassified to profit or loss including the related tax effects.
2 Comprises a net actuarial gain of R6,5 million (2015: net actuarial gain of R6,9 million) and
unrecognised loss due to asset ceiling of R7,7 million (2015: R21,4 million).
3 During the current year, R99,1 million (2015: Rnil) of the foreign currency translation reserve,
relating to TBCG, as well as R19,4 million (2015: R95,6 million) on the available-for-sale financial
asset derecognised in terms of the Black Managers Trust Participation Rights Scheme was reclassified
to profit or loss.
Condensed consolidated segmental information
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated
Turnover
Domestic operations 26 311,1 23 630,6
Grains 12 845,2 11 375,4
Milling and baking 9 208,5 8 160,5
Other Grains 3 636,7 3 214,9
Consumer Brands - Food 11 029,3 10 108,1
Groceries 4 700,8 4 265,4
Snacks & Treats 2 270,8 2 137,1
Beverages 1 326,4 1 166,8
Value Added Meat Products 2 229,6 2 095,1
Out of Home 501,7 443,7
Home, Personal Care and Baby (HPCB) 2 436,6 2 147,1
Personal care 682,4 630,9
Baby care 862,1 803,0
Home care 892,1 713,2
International (including Exports) 5 386,4 5 029,4
Exports 1 625,7 1 872,4
International operations - Central Africa 883,8 706,5
International operations - East Africa 959,8 762,6
International operations - West Africa** 476,7 412,0
Deciduous Fruit (LAF) 1 683,3 1 434,0
Other intergroup sales (242,9) (158,1)
Continuing operations 31 697,5 28 660,0
Discontinued operation - TBCG** 1 598,5 2 897,6
Total turnover 33 296,0 31 557,6
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated*
Operating income before impairments and abnormal items
Domestic operations 3 695,8 3 593,2
Grains 2 001,9 2 060,8
Milling and baking 1 596,2 1 680,5
Other Grains 405,7 380,3
Consumer Brands - Food 1 194,8 1 095,9
Groceries 465,6 410,6
Snacks & Treats 316,0 314,9
Beverages 156,8 137,8
Value Added Meat Products 158,0 146,3
Out of Home 98,4 86,3
Home, Personal Care and Baby (HPCB) 533,7 443,6
Personal care 134,2 129,7
Baby care 211,3 214,2
Home care 188,2 99,7
Other*** (34,6) (7,1)
International (including Exports) 547,2 461,7
Exports 247,0 338,0
International operations - Central Africa 150,2 115,8
International operations - East Africa 50,9 (46,5)
International operations - West Africa** (48,5) (38,2)
Deciduous Fruit (LAF) 147,6 92,6
Total operating income before IFRS 2 charges 4 243,0 4 054,9
IFRS 2 charges (88,9) (29,2)
Total operating income after IFRS 2 charges 4 154,1 4 025,7
Discontinued operation - TBCG** 63,2 (392,5)
Total operating income 4 217,3 3 633,2
* The comparatives have been restated for the retrospective reclassification relating to the treatment
of foreign exchange profits and losses on foreign cash balances and loans of a funding nature
previously included in operating income and now reclassified to net finance costs. Refer note 9 for
further details.
** Previously reported Nigeria segment included TBCG which is now disclosed as a discontinued operation,
with the remaining segment shown as International operations - West Africa.
*** Includes the corporate office and management expenses relating to international investments.
Condensed consolidated statement of financial position
Audited Audited
year ended year ended
30 September 30 September
R'million 2016 2015
ASSETS
Non-current assets 13 429,8 13 237,0
Property, plant and equipment 4 541,9 4 641,2
Goodwill 2 098,6 2 239,1
Intangible assets 1 841,9 1 993,9
Investments 4 904,8 4 312,3
Deferred taxation asset 42,6 50,5
Current assets 11 099,1 11 617,3
Inventories 5 769,8 5 670,0
Trade and other receivables 4 592,3 4 895,7
Cash and cash equivalents 737,0 1 051,6
Total assets 24 528,9 24 854,3
EQUITY AND LIABILITIES
Issued capital and reserves 15 547,6 13 830,1
Non-controlling interests 486,3 (52,5)
Total equity 16 033,9 13 777,6
Non-current liabilities 1 988,8 2 059,2
Deferred taxation liability 253,5 200,3
Provision for post-retirement medical aid 666,0 643,1
Long-term borrowings 1 069,3 1 215,8
Current liabilities 6 506,2 9 017,5
Trade and other payables 4 157,1 4 796,8
Provisions 525,3 523,3
Taxation 128,1 73,4
Short-term borrowings 1 695,7 3 624,0
Total equity and liabilities 24 528,9 24 854,3
Net debt 2 028,0 3 788,2
Condensed consolidated statement of cash flows
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated*
Cash operating profit 4 836,8 4 396,4
Working capital changes (604,0) (811,6)
Cash generated from operations 4 232,8 3 584,8
Finance cost net of dividends received 109,1 (70,7)
Taxation paid (1 107,4) (1 158,8)
Cash available from operations 3 234,5 2 355,3
Dividends paid (1 661,1) (1 643,0)
Net cash inflow from operating activities 1 573,4 712,3
Purchase of property, plant and equipment (945,4) (881,6)
Net cash on disposal of subsidiary 1 075,7 -
Acquisition of business (69,7) -
Black Managers Trust (BMT) shares exercised 38,7 285,7
Proceeds from disposal of property, plant, equipment 15,4 53,7
Decrease in other loans 0,2 -
Investment acquired - (525,4)
Proceeds received on insurance claims - 7,5
Proceeds received on empowerment available-for-sale financial assets - 4,2
Net cash inflow/(outflow) from investing activities 114,9 (1 055,9)
Proceeds from issue of share capital - 9,1
Long and short-term borrowings repaid (573,5) (955,1)
Long and short-term borrowings raised 11,3 1 022,0
Net cash (outflow)/inflow from financing activities (562,2) 76,0
Net increase/(decrease) in cash and cash equivalents 1 126,1 (267,6)
Effect of exchange rate changes 125,7 66,7
Cash and cash equivalents at the beginning of the period (2 126,8) (1 925,9)
Cash and cash equivalents at the end of the period (875,0) (2 126,8)
Cash resources 737,0 1 051,6
Short-term borrowings regarded as cash and cash equivalents (1 612,0) (3 178,4)
(875,0) (2 126,8)
* The comparatives have been restated for the retrospective reclassification relating to the treatment of
foreign exchange profits and losses on foreign cash balances and loans of a funding nature previously
included in operating income and now reclassified to net finance costs. Refer note 9 for further details.
Condensed consolidated statement of changes in equity
Shares
Share held by Total
capital Non- subsidiary and Share-based attributable Non-
and distributable Accumulated empowerment payment to owners controlling Total
R'million premium reserves profits entities reserve of the parent interests equity
Balance at 1 October 2014 139,4 2 086,3 13 198,8 (2 671,9) 424,8 13 177,4 769,8 13 947,2
Profit for the year - - 1 727,1 - - 1 727,1 (785,1) 942,0
Other comprehensive income for the year3 - 277,7 (9,7) - - 268,0 31,2 299,2
Total comprehensive income - 277,7 1 717,4 - - 1 995,1 (753,9) 1 241,2
Issue of share capital and premium 9,1 - - - - 9,1 - 9,1
Subsidiary - legal reserve transfer - 3,3 (3,3) - - - - -
Transfers between reserves - 276,8 (185,4) - (91,4) - - -
Share-based payment - - - - 90,1 90,1 - 90,1
Dividends on ordinary shares - - (1 574,6) - - (1 574,6) (19,4) (1 594,0)
Total dividends - - (1 732,9) - - (1 732,9) (19,4) (1 752,3)
Less: Dividends on empowerment shares - - 158,3 - - 158,3 - 158,3
Purchase of Tiger shares by empowerment entity - - - (71,0) - (71,0) - (71,0)
Sale of shares by empowerment entity1 - - - 204,0 - 204,0 (49,0) 155,0
Balance at 30 September 2015 148,5 2 644,1 13 152,9 (2 538,9) 423,5 13 830,1 (52,5) 13 777,6
Profit for the year - - 3 305,6 - - 3 305,6 16,1 3 321,7
Other comprehensive income for the year2,3 - (52,3) (0,9) - - (53,2) (33,7) (86,9)
Total comprehensive income - (52,3) 3 304,7 - - 3 252,4 (17,6) 3 234,8
Disposal of subsidiary - - - - - - 587,6 587,6
Transfers between reserves - 454,3 (454,3) - - - - -
Share-based payment4 - - - - 65,0 65,0 - 65,0
Dividends on ordinary shares - - (1 629,9) - - (1 629,9) (19,7) (1 649,6)
Total dividends - - (1 777,7) - - (1 777,7) (19,7) (1 797,4)
Less: Dividends on empowerment shares - - 147,8 - - 147,8 - 147,8
Sale of shares by empowerment entity1 - - - 30,0 - 30,0 (11,5) 18,5
Balance at 30 September 2016 148,5 3 046,1 14 373,4 (2 508,9) 488,5 15 547,6 486,3 16 033,9
Notes
1 Relates to the exercising of options vested post the December 2014 lock-in period in terms of the Black Managers Participation Rights Scheme (BMT).
2 During the current period, R99,1 million of the foreign currency translation reserve, relating to TBCG, was reclassified to profit and loss.
3 The other comprehensive income for the FCTR includes the amounts related to the associates of R127,7 million (2015: R281,7 million).
4 Included in the movement of the share-based payment are options exercised amounting to R5,9 million (2015: Rnil).
Other salient features
Audited Audited
year ended year ended
30 September 30 September
R'million 2016 2015
Capital commitments 1 133,7 1 119,4
- contracted 92,0 148,5
- approved 1 041,7 970,9
Capital commitments will be funded from normal operating cash flows
and the utilisation of existing borrowing facilities. Additional
capital requirements of R1,3 billion are expected to be approved
in 2017.
Capital expenditure 945,4 881,6
- replacement 638,9 677,8
- expansion 306,5 203,8
Contingent liabilities
- guarantees and contingent liabilities 12,8 16,9
Inventory related items
Inventories carried at net realisable value 137,2 126,5
Inventories written down and recognised in cost of sales as an expense 100,6 97,4
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 financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports and the requirements of the Companies Act of South Africa. The Listings
Requirements require preliminary 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 Pronouncements as issued by Financial Reporting
Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms
of IFRS and are consistent with those applied in the previous consolidated annual financial statements.
Ernst and Young Inc., Tiger Brands Limited's independent auditors, have audited the consolidated 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. Any reference to future
financial performance included in this announcement has not been audited or reported on by the group's external
auditors. The auditors' report does not necessarily report on all the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditors'
engagement they should obtain a copy of the auditors' report together with the accompanying financial information from
the issuer's registered office.
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.
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated#
2. Operating income before impairments and abnormal items
Depreciation (included in cost of sales and other operating expenses) 558,8 517,8
Amortisation 11,9 23,8
IFRS 2 (included in other operating expenses)
- Equity settled 70,9 90,1
- Cash settled 18,0 (60,9)
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG)
as a discontinued operation.
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated*#^
3. Impairments
Goodwill and indefinite useful life 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. During the current year, R300,0 million
of HPCB goodwill and indefinite life intangible assets have been
impaired. Property, plant and equipment to the value of R34,8 million
has been impaired, mainly relating to Grains (R22,8 million) and Consumer
Brands - Food (R12,0 million).
Impairment of property, plant and equipment (34,8) (39,8)
Impairment of intangible assets/investments (300,0) (280,0)
(334,8) (319,8)
4. Abnormal items
Profit/(loss) on disposal of property, plant and equipment 11,0 (7,3)
Write-off of other related assets - (72,9)
Profit on sale of empowerment available-for-sale financial assets - 47,0
Insurance claim income - 7,5
Historical statutory liabilities - 7,0
11,0 (18,7)
5. Net finance costs and investment income
Net interest paid (303,6) (224,5)
Investment income 6,3 0,8
Net foreign exchange gains 121,0 20,5
Net financing costs and investment income (176,3) (203,2)
* The comparatives have been restated for the retrospective reclassification relating to the treatment
of foreign exchange profits and losses on foreign cash balances and loans of a funding nature previously
included in operating income and now reclassified to net finance costs. Refer note 9 for further details.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG)
as a discontinued operation.
^ Historically, impairments have been disclosed as part of total abnormal items. Impairments have now
been disclosed on the face of the income statement for better clarity.
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated*#
6. Taxation
Tax rate reconciliation
The reconciliation of the effective rate of taxation with
the statutory taxation rate is as follows:
Taxation for the year as a percentage of income before taxation 27,0 23,9
Impairment of goodwill and intangibles (1,9) (2,0)
Expenses and provisions not allowed for taxation (1,0) (1,4)
Non-recognition of other current year timing differences (0,4) -
Non-recognition of other prior year timing differences (0,3) -
Additional investment allowances 0,4 -
Prior year adjustments (0,1) 4,0
Withholding taxes (1,1) (0,7)
Income from associates 5,3 4,1
Effect of differing rates of foreign taxes (0,2) (0,1)
Other sundry adjustments 0,3 0,2
Rate of South African company taxation 28,0 28,0
7. Analysis of profit/(loss) from discontinued operation
Profit/(loss) for the year from discontinued operation
(attributable to owners of the company)
Turnover 1 598,5 2 897,6
Expenses (1 535,3) (3 290,1)
Operating income/(loss) before impairments and abnormal items 63,2 (392,5)
Impairments - (1 371,1)
Profit on disposal of subsidiary 49,7 -
Operating income/(loss) after impairments and abnormal items 112,9 (1 763,6)
Finance costs (85,3) (173,0)
Profit/(loss) before taxation 27,6 (1 936,6)
Taxation - (230,9)
Profit/(loss) for the year from discontinued operation 27,6 (2 167,5)
Attributable to non-controlling interest 16,8 773,2
Attributable to owners of parent 44,4 (1 394,3)
Cash flows from discontinued operation
Net cash inflows/(outflows) from operating activities 271,1 (57,3)
Net cash outflows from investing activities (38,6) (116,8)
Net cash inflows from financing activities 89,0 33,5
Net cash inflows/(outflows) 321,5 (140,6)
* The comparatives have been restated for the retrospective reclassification relating to the treatment of
foreign exchange profits and losses on foreign cash balances and loans of a funding nature previously
included in operating income and now reclassified to net finance costs. Refer note 9 for further details.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG)
as a discontinued operation.
Audited
Audited year ended
year ended 30 September
30 September 2015
R'million 2016 Restated#
8. Reconciliation between profit for the year and headline earnings
Continuing operations
Profit for the year attributable to owners of the parent 3 261,2 3 121,4
(Profit)/loss on sale of plant, equipment and vehicles (8,3) 9,8
Impairment of intangible assets 300,0 269,6
Impairment of property, plant and equipment 25,3 32,9
Profit on sale of empowerment shares - (39,1)
Write-off of other related assets - (5,2)
Insurance claim income - (5,4)
Headline earnings adjustments - associates
- Profit on sale of non-current assets (116,9) (3,0)
Headline earnings for the year 3 461,3 3 381,0
Tax effect of headline earnings (7,0) (5,8)
Attributable to non-controlling interest - (4,9)
Discontinued operation
Profit/(loss) for the year attributable to owners of the parent 44,4 (1 394,3)
Loss on disposal of plant, equipment and vehicles 0,1 -
Profit on disposal of subsidiary (49,7) -
Impairment of property, plant and equipment - 900,3
Headline earnings for the year (5,2) (494,0)
Tax effect of headline earnings - -
Attributable to non-controlling interest - (470,8)
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG)
as a discontinued operation.
9. Reclassification of foreign exchange gains and losses
All foreign exchange gains and losses relating to revaluation of foreign cash balances and loans of a funding nature
have been accounted for as finance-related costs (refer note 5) and thus reclassified from operating income to finance
costs (retrospective application with comparatives restated to reflect the reclassification). The impact on the
comparatives is as follows:
2015
Operating income after impairments and abnormal items as previously reported 1 944,1
Discontinued operation 1 763,6
Reclassification to finance costs (20,5)
Restated operating income after impairments and abnormal items after reclassification on
finance costs from continuing operations 3 687,2
10. Business combination
Hercules Cold Storage Proprietary Limited
On 1 August 2016, Tiger Brands acquired 100% of the net assets of the Hercules Cold Storage Proprietary Limited
business, a company based in Pretoria, South Africa, and engaged in the manufacture of processed meats focused on
the consumer segment. Product segments are polony, viennas, russians and hampers. The purchase consideration was
accounted for as follows:
Acquisition
value
Intangibles 10,5
Property, plant and equipment 52,0
Inventories 4,7
Accounts payable (7,9)
Fair value of net assets acquired 59,3
Goodwill 10,4
Purchase consideration 69,7
From date of acquisition to 30 September 2016, the Hercules business contributed R25 million to group revenue and
Rnil to profit after tax. Had the business been consolidated from 1 October 2015 to 30 September 2016, the
contribution to group revenue would have amounted to R155 million and a negative profit contribution of R5 million
(loss) would have been made to profit after taxation.
Goodwill represents the difference between the purchase consideration and the fair value of the net assets acquired
and provides Tiger Brands with access to new markets and improved synergies.
The purchase consideration was financed out of operating cash flows.
11. Subsequent events
There are no material events that occurred during the period subsequent to 30 September 2016, but prior to these
financial statements being authorised for issue.
CORPORATE INFORMATION
Tiger Brands Limited
Registration number: 1944/017881/06
Incorporated in the Republic of South Africa
Share code: TBS ISIN: ZAE000071080
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
Independent non-executive directors
AC Parker (chairman), BL Sibiya (deputy chairman), YGH Suleman, SL Botha,
KDK Mokhele, MP Nyama, RD Nisbet, M Makanjee, M J Bowman, MO Ajukwu
Executive directors
LC Mac Dougall (chief executive officer) (appointed 10 May 2016),
CFH Vaux, NP Doyle (chief financial officer) (appointed 1 August 2016)
Company Secretary
T Naidoo
Investor Relations
N Catrakilis-Wagner (011) 840 4841
Postal address
PO Box 78056, Sandton, 2146, South Africa
Telephone
(011) 840 4000
Sponsor
JP Morgan Equities South Africa (Pty) Limited
1 Fricker Road, Corner Hurlingham Road, Illovo, 2196
Share registrars
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown 2107, South Africa.
Telephone
(011) 370 5000
Website: www.tigerbrands.com
Date: 23/11/2016 07:05:00 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
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